LORD Levene’s investment vehicle, NBNK, has entered talks to buy out National Australia Bank’s UK business, in a move that could shake up the industry by creating a banking behemoth to rival the dominant players.
If NBNK, run by a group of City grandees, is successful in buying both NAB’s UK holdings and the 632 Lloyds branches it bid for in July, the resulting entity would be immediately catapulted into the premier league of high street banks.
City A.M. understands that the talks are at a preliminary stage but any bid is likely to run into the billions of pounds.
The discussions are formal enough that NBNK’s shares on the LSE’s junior Aim market are expected to be suspended this morning pending the outcome of negotiations. A source familiar with the situation said that a suspension is likely because NBNK is far smaller than its takeover target and because there is little detailed information available publicly on NAB’s UK assets, both of which could prompt sharp price movements.
The resulting bank could have nearly 1,000 branches and up to £55bn in deposits, depending on the details of the deal.
Its mix of sites would be concentrated in the north of England and Scotland, and would likely include NAB’s Clydesdale Bank, Yorkshire Bank and, if NBNK’s Lloyds bid is successful, Cheltenham & Gloucester and Lloyds TSB Scotland.
The NAB purchase would also give NBNK an IT platform into which it could integrate the Lloyds branches, rather than building one from scratch.
And the new bank would have the experience of some old City hands at its disposal: its board boasts veterans such as senior Evercore adviser Lord Forsyth and it is headed by former Northern Rock chief Gary Hoffman.
If NBNK can tie up a deal with NAB before closing in on Lloyds, it also could defuse the argument by the Vickers Commission that the Lloyds sale will not create an adequate challenger bank. Cooperative Financial Services and Sun Capital have also bid for the Lloyds branches.