Shareholders in National Australia Bank (NAB), which owns Clydesdale and Yorkshire Bank, last night voted overwhelmingly in favour of plans to spin off Clydesdale and float it on the London and Australian stock-markets next month.
Clydesdale Group, which includes Yorkshire Bank and is often referred to as CYBG, is valued at an estimated £2bn. It is one of the largest of Britain's mid-sized challenger banks, with 2.8m customers and 275 branches.
NAB shareholders will hold 75 per cent of the bank’s shares when it demerges, while the remaining 25 per cent will be sold to institutional investors through the IPO.
Ken Henry, chairman of the NAB group, said at the meeting the decision to spin off the banks were down to "turbulence" in the UK economy creating "financial challenges" for banks, which impacted on NAB profits and shareholder returns:
As a result of the global financial crisis, the UK economy experienced turbulence and a recession which impacted jobs and interest rates, the local housing market, the availability of credit and the liquidity of financial markets.
It led to declining commercial property values, higher funding costs and challenging regulatory and political conditions. For UK banks, this manifested in financial challenges.
"The UK retail banking sector, including Clydesdale Bank, faced conduct-related issues," he added, saying:
Clydesdale Bank has been a significant factor in NAB shareholder returns not being at the level that we have wanted, nor competitive with our Australian peers.
The bank has made multiple write-downs in recent years thanks to PPI mis-selling fines and toxic loans.
Earlier this month, Clydesdale revealed a cut-price price range for the float of between 175p-235p per share.
The price range gives Clydesdale a market capitalisation of between £1.54bn and £2.07bn, a discount from the bank’s book value of between £2bn and £2.5bn.
Clydesdale is expected to start conditional dealings on the London Stock Exchange, its primary listing, on 2 February, and on the Australian Securities Exchange on 3 February.