NAB shareholders will get one Clydesdale Bank share for every four they hold in the Australian bank, according to details released today about the float of the troubled UK business next February.
Clydesdale will be listed both on the London Stock Exchange and the ASX.
And the shares, for which a price will be set in early February, will probably not attract tax. The NAB has sought a tax ruling from the ATO for Australian residents.
The NAB’s plan is to divest 75% of Clydesdale to NAB shareholders, with the remaining 25% sold in an IPO to institutional investors.
The business is worth somewhere between $3.4 billion and $4 billion depending on the earnings multiple to be decided.
The float is part of the NAB’s strategy to get rid of non-performing assets and concentrate on the business in Australia and New Zealand.
Chairman Michael Chaney says directors unanimously recommend NAB shareholders vote in favour of all of the proposed resolutions on the demerger.
“In recent years, NAB has taken a number of steps and initiatives to strengthen CYBG’s (Clydesdale Bank) standalone position,” Chaney says.
CEO Andrew Thorburn says NAB’s focus and resources can be directed post the demerger to NAB’s core priorities within its Australia and New Zealand businesses.
“Following the demerger, NAB is likely to benefit through a combination of improved return on equity and capital generation given the higher profitability and returns currently generated from NAB’s core Australia and New Zealand businesses,” says Thorburn.
A shareholder meeting is expected to be held on January 27 in Melbourne.
UK authorities require capital support of £1.7 billion ($A3.6 billion) to cover any future claims against the business for “miss-selling” insurance products to small businesses.
This was part of the reason why NAB raised $5.5 billion this year, the biggest capital raising in Australian company history. The other reason is to meet stricter capital rules designed to make Australian banks safer from any future financial crisis.