Clydesdale to be f loated as bank reveals sell-off plans
SCOTLAND’S third largest bank is set to become independent again after its foreign owners announced plans to float it on the stock market.
Clydesdale Bank will be sold by the end of the year by parent company National Australia Bank.
Around one third of the Glasgowbased lender will be sold to institutional investors before the rest of the bank is offered.
It comes after a troubled time for Clydesdale, which was hit last month by a record £21million fine after falsifying documents to try to avoid compensating victims of mis-selling.
In a cover-up lasting more than two years, the Clydesdale and sister firm Yorkshire Bank misled the financial ombudsman, obstructing its investigation into payment protection insurance complaints.
Rogue staff deleted records to make it look as if the customer was never sold PPI or lied about not being able to trace documents.
But now the bank has returned to profit after years of heavy losses.
The sell- off ends a period of uncertainty after NAB f i rst announced plans to offload it.
Clydesdale and Yorkshire, which between them have about 7,000 staff and more than 300 branches, racked up hefty losses after the financial crash.
Discussions with regulators over the proposed split are ongoing, with the UK’s Prudential Regulation Authority demanding that NAB sets aside up to £1.7billion to cover potential losses from mis-selling and other conduct issues.
Debbie Crosbie, Clydesdale’s acting chief executive, said: ‘Today’s announcement marks the beginning of an exciting new opportunity for Clydesdale and Yorkshire Banks.
‘Our performance is improving and we’re providing real customer choice in the UK which is driving encouraging growth.’
In half-year results yesterday, Clydesdale Bank reported a 33 per cent improvement in pre-tax cash earnings to £118million. NAB said last autumn that the Clydesdale sale was an ‘absolute priority’ after it reported a 1.1 per cent drop in full-year profits to £2.9billion, despite strong trading in its core business.
The Australian bank had previously said it was examining a range of options for the business, which has been plagued by bad debts and misconduct charges.
The Clydesdale – founded in Glasgow in 1838 – may still face a fraud inquiry over mis- selling allegations.
According to City watchdogs, the worst of the cover-up – from May 2012 to June 2013 – resulted in up to 42,200 PPI complaints being rejected unfairly and up to 50,900 customers receiving inadequate compensation.
Clydesdale said it had taken disciplinary action against the staff involved and promised to review 180,000 complaints handled before August last year.
Clydesdale and Yorkshire’s failings were so serious that the £20.7million fine dwarfs the next biggest penalty handed out for PPI, which was £7million for Alliance & Leicester in 2008.
Clydesdale has set aside just over £800million for customers, of which £291million has been paid out already.
But its bill is set to spiral as it is forced to revisit the 180,000 complaints.
£1.7bn exit bill – City: Page 82