Cantillon: CYBG’s Irish supremo Duffy makes all the right moves

Merger with multi-branch, deposit rich RBS subsidiary could be transformational

David Duffy  Photograph: David Sleator

David Duffy Photograph: David Sleator

 

David Duffy seemingly can do no wrong. Fresh from putting AIB’s house back in order and then leading the spinout of CYBG – the parent of Clydesdale and Yorkshire banks – from National Australia Bank group, he is currently working assiduously to land what would be a transformational merger with Williams & Glyn.

The RBS subsidiary is on the block as part of the price demanded by the European Commission for the taxpayer bailout that kept the bank’s head above water after the financial crash.

It 314-branch network would considerably beef up CYBG’s current portfolio of 290 outlets while its £24 billion in deposits would bring CYBG’s balance sheet to around £60 billion. RBS would like £1.3 billion for the business but is likely to have to settle for something short of that.

Duffy, who lodged a non-binding offer for the banking unit, has moved to beef up his team ahead of any decision, signing up former RBS high-fliers Mark Fisher and Nick Walford.

The ability of CYBG to digest Williams & Glyn is just one of the challenges for Duffy. Already the bank has indicated it is not interested in taking on six NatWest branches in Scotland as they operate on a different IT system than the 308 RBS branches that comprise the rest of the portfolio.

IT has been an Achilles heel for RBS, as users of its Ulster Bank network found when a glitch blocked customer access for four weeks in 2012. And difficulties in separating the IT systems of the RBS branches in the Williams & Glyn book from the rest of the RBS network have been a major cause of the delay in selling the business which is now on the block for more than seven years.

Duffy also faces competition from banking heavyweight Santander for the RBS spinoff.

If Duffy succeeds, he will face the significant challenge of integrating the two operations; if not, he has already said CYBG, which sees itself as the consolidator of choice in the UK banking sector, will pursue other acquisitions.

Either way, it looks like being a landmark year for the Irishman, who was this week named as one of the five UK business leaders to watch by the Sunday Telegraph.

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