NAB urged to push on with sale of UK arm
A spokeswoman for Santander told BusinessDay they would not make a statement on the news reports, but confirmed Santander UK had denied it was in talks to buy NAB's underperforming British banks. Following a rally in NAB shares on talk of a possible sale, they ended nearly 1 per cent lower on Tuesday at $26.59.
On Monday, the chief executive of Santander UK, Ana Patricia Botin, declined to comment on the bank's rumoured interest in Clydesdale and Yorkshire, but said the bank was focused on organic growth.
NAB has declined to comment on the reports, but its chief executive, Cameron Clyne, has previously insisted he has no intention of selling at "fire sale" prices.
A Nomura banking analyst, Victor German, said regardless of whether the assets were sold, there remained a "fundamental value" in NAB.
He said as the British assets were non-core for NAB, selling them at a reasonable price would be appropriate for the bank. "I think the amount of time that management has to divert into [the British assets] and also the resources that have to go into managing this business are probably not worth the upside.
"I think if they're able to sell it at a reasonable price, it's the right thing to do, even though from a longer-term perspective, maybe there is some value in the franchise."
A report in London's Sunday Times triggered speculation that Santander wanted to bolster its British business before a planned listing in London of about £10 billion ($15 billion).
On Sunday it was reported that Santander was considering a £2 billion bid for NAB's banks, which mostly operate in northern England and Scotland.
The news had been greeted with scepticism by analysts, but they said any deal would be positive for NAB.
The Citigroup analyst Craig Williams said a sale at 0.9 times Clydesdale's book value would have returned as much as $1.2 billion to shareholders. But any deal would be a "sentiment booster" while group earnings would be barely changed.
"Shareholders would welcome the absence of management distraction and the ongoing dilution to group returns that the UK retail business represents," Mr Williams said.
Last year, NAB was plagued by falling earnings, a weak share price and millions of dollars in losses from its British business.
At its annual meeting last month, about 21 per cent of its shareholders voted against the bank's remuneration report.
Frequently Asked Questions about this Article…
Analysts have urged National Australia Bank (NAB) to push ahead with the sale of its troubled British unit—primarily Clydesdale and Yorkshire banks—saying the assets are non-core and selling at a reasonable price would be appropriate. NAB has declined to comment on the reports.
No. Reports that Santander was considering a bid were denied by Santander UK. A Santander spokeswoman said they would not comment on the reports, and Santander UK has denied it was in talks to buy NAB’s underperforming British banks.
NAB shares initially rallied on talk of a possible sale but finished nearly 1% lower, closing at $26.59 on the day referenced in the article.
London reports suggested Santander was considering a roughly £2 billion bid for NAB’s British banks. Separate coverage also noted Santander was preparing for a planned London listing of about £10 billion (around $15 billion).
Analysts said a sale could be positive for shareholders. Citigroup’s Craig Williams estimated that a sale at 0.9 times Clydesdale’s book value could have returned about $1.2 billion to shareholders. They also said a sale would be a sentiment booster, reduce management distraction and limit ongoing dilution to group returns, even if group earnings were barely changed.
Nomura analyst Victor German and others argued the British assets are non-core, require management time and resources, and have produced losses. Selling them at a reasonable price would free management to focus on core business and could unlock fundamental value for NAB.
NAB declined to comment on the recent reports, but CEO Cameron Clyne has previously said he does not intend to sell the UK assets at "fire sale" prices.
Last year NAB experienced falling earnings, a weak share price and millions of dollars in losses from its British business. At the bank’s most recent annual meeting, about 21% of shareholders voted against the remuneration report, reflecting shareholder dissatisfaction.
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