National Australia Bank announces terms of UK exit

National Australia Bank plans to give its shareholders one security in its UK unit CYBG for every four NAB shares they own as part of a plan to exit overseas investments and focus on Australia and New Zealand.

National Australia will seek shareholder approval for the demerger January 27th, the Melbourne-based lender said in a statement to the stock exchange Monday. Under the proposed plan, 75 per cent of the unit will be given to existing shareholders and the balance sold through an initial public offering. The spinoff of CYBG, formerly known as Clydesdale and Yorkshire banks, will end years of struggles in the country for National Australia and allow chief executive officerAndrew Thorburn to focus on boosting Australia and New Zealand mortgages and corporate loans.

Former AIB chief executive David Duffy joined Clydesdale as chief executive in June of this year.

The lender’s board formally approved proceeding with the demerger and IPO last month. After the spinoff, National Australia “is likely to benefit through a combination of improved return on equity and capital generation given the higher profitability and returns currently generated from” the Australia and New Zealand businesses, Thorburn said in the statement.

CYBG shares will be listed on the London Stock Exchange and the CHESS depositary interests on the Australian Securities Exchange, the lender said.

National Australia expects the entire process to be completed in February. The lender said in October that its return on equity, a measure of how efficiently it uses its capital, would have risen to 14.6 per cent from the 12 per cent reported for the year ended September 30th had the UK unit been separated.

National Australia shares rose 0.1 per cent to A$29.59 at 3:25 p.m. in Sydney, compared with a 0.3 per cent gain for the benchmark SandP/ASX200 index.

Bloomberg