NAB shareholders vote to demerger and float the troubled UK assets

Photo: Chip Somodevilla/Getty Images

National Australia Bank shareholders today voted overwhelmingly in favour of the demerger and float of the Clydesdale Bank in the UK.

Three-quarters of the shares will be allocated to current shareholders while the rest will go in a $A1 billion float in the UK from February 8. The price range for the Clydesdale shares is £1.75 ($A3.58) to £2.35 ($A4.80).

A short time ago, NAB shares were down more than 3% to $26.90 in a falling market. The Commonwealth had lost 2% to $77.40.

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 last 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.

The Clydesdale 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.

Last year the bank completed the sale of the final holding in the Great Western Bank in the US, the $2.4 billion sale of 80% of the insurance business and the sale of most of the NAB’s commercial real estate portfolio.

The Clydesdale IPO, with a primary listing on the London Stock Exchange, will happen next month, with the share price set sometime early in the month.

NAB chair Ken Henry told a shareholder meeting today that the NAB’s strategy following the demerger will be to continue to deliver on core markets.

“We will focus on key segments such as mortgage, debt free, micro, small and medium business customers, and we will continue to maintain an unrelenting focus on delivering a great customer experience,” he said.

“This will include developing leading technology, selective expansion in Asia, and bringing new products to market quickly.”

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