National Australia Bank (NAB) is planning to IPO its troubled UK banking businesses, which have been caught up in a raft of misselling scandals.
NAB has looked for a way out of Clydesdale Bank and Yorkshire Bank and announced overnight that it has decided to IPO the pair in London.
Around 30% of of new holding company Listco will be floated while the other 80% of shares will be given to NAB shareholders.
NAB has good reason to want to get out of UK banking. Clydesdale has found itself caught up in the UK payment protection insurance (PPI) misselling scandal that hit the industry in the last few years.
Insurance was wrongly sold alongside loans, credit cards and mortgages and banks have been forced to payout to customers who were mis sold the cover.
The scandal has cost all British banks around £20 billion ($US30.4 billion) in damages and penalties over the past five years.
In April, Clydesdale was hit with a £21 million ($US31.96 million) fine from Britain’s financial watchdog for its handling of PPI claims, saying the bank failed to handle claims properly. NAB has been hold it has to set aside £1.7 billion ($US2.59 billion) to cover potential claims and fines.
The UK banks claim their on the road to recover. The bank said today that in the past six months earnings are up 33%, bad debts are down 56% and mortgage lending has increased by 14.5%.
Acting chief executive Debbie Crosbie said:
Oversight and governance of historical PPI complaints have been completely overhauled and comprehensive programmes are underway to put this right to ensure we are doing the right thing by our customers.