Incoming National Australia Bank chief Andrew Thorburn has been given further incentive to resolve its troubled British operations, with long-suffering investors labelling it the biggest spark to the group’s share price.
Ahead of NAB’s interim result tomorrow, a survey of investors by Morgan Stanley, obtained by The Australian, revealed a recovery in British profits and an exit are “the two factors which will have the most positive influence on NAB’s share price”.
Fund managers have long yearned for an exit from Britain given the drag on NAB’s return on equity compared with rivals Commonwealth Bank, ANZ and Westpac, which last month hit record highs on the sharemarket.
NAB rallied the hardest of the major banks last year, but its close yesterday of $34.11 remains far below its 2007 peak of $44.84.
Chief Cameron Clyne, who hands over to Mr Thorburn in August, has struggled to sell the British business due to operational problems, probably resulting in a hefty loss, and there being a lack of buyers.
NAB owns the Clydesdale and Yorkshire banks, plus a £3.1 billion ($5.6bn) commercial real estate book that is being run off.
Optimism has been rising in the past six months that NAB could exit Britain on the back of the nation’s improving economy and strong demand for commercial real estate deals, but not all experts are convinced.
“There would be few obvious buyers for NAB UK, given the lack of scale, poor geographical distribution and likely political opposition to an acquisition by one of the larger banks,” Deutsche Bank analyst James Freeman said last week.