NAB sticks to its guns on UK bank strategy

City A.M. Reporter
NATIONAL Australia Bank (NAB) is comfortable with its UK operations and is under no pressure to sell or bulk up, a spokesman said yesterday, but investors say NAB will have to choose one way or the other soon.

NAB, which has more than 300 branches in the UK, was tipped to be a player in the impending UK bank consolidation. Chief executive Cameron Clyne has previously implied that he regarded the bank as more of a consolidator in the sector rather than as one of the institutions being taken over. It has appointed Goldman Sachs and Morgan Stanley to advise on its strategy.

NAB was thought to have pulled out of an auction to buy Royal Bank of Scotland branches.

“At the end of the day, their UK operation is subscale. In the long term, they cannot exist in the same form. Either they add up or they quit the market,” said Mark Nathan, a banking analyst at fund manager Arnhem Investment Management.

The sale of 318 branches by RBS comes at a time of upheaval in British banking, which has been battered by the global financial crisis and several lenders had to be bailed out by the UK government.

Besides the RBS branches, several banking assets from Lloyds and Northern Rock and Allied Irish Banks are all due to come on the block.

“In relation to UK, we are comfortable with status quo and we are under no pressure to participate in the consolidation there,” a spokesman said in response to reports that Spain’s BBVA has been in talks in recent weeks to possibly buy the Yorkshire and Clydesdale banks in Britain.

Separately, weekend newspaper reports claimed Spain’s BBVA was in talks to buy NAB’s branches in a deal that would value NAB’s British business at £2bn.

NAB shares were yesterday down 2.8 per cent lower in line with the broader index.