The boss of Clydesdale Bank has denied suggestions that its £2.5 billion stock market listing could be in trouble as he confirmed that the Australian-owned lender had already held talks with more than 20 key investors.
David Duffy, the chief executive of Clydesdale and Yorkshire banks, said that he was confident the lender was safely on course to complete its IPO by January at the latest, amid speculation that some fund managers had balked at the potential price of shares in the bank.
Investment bankers at Bank of America Merrill Lynch, Macquarie and Morgan Stanley have held a series of meetings in London, Edinburgh and New York with 25 fund managers and venture capitalists about buying into Clydesdale as National Australia Bank prepares to spin off the business.
A formal price range has yet to be set, but Mr Duffy said that a potential valuation of 0.7 times the bank’s book value had been discussed with investors and he described the reaction as positive.
“We are confident. If I look at the flotation of this bank it is in a better position than the majority of others I have seen in the market,” he said.
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The early meetings come amid speculation that NAB could struggle to float Clydesdale, with investors worried about the risks still facing the bank despite the Australian lender handing it a £1.7 billion indemnity fund to cover the cost of potential compensation for PPI and interest rate hedging products.
NAB plans to hand 75 per cent of its shares in Clydesdale to its existing shareholders, but must find sufficient interest among outside investors to sell the remaining 25 per cent that it owns to meet the London stock exchange’s requirement for listed companies to have a minimum of a quarter of their shares in free float.
Precise comparisons between different lenders are notoriously difficult because of the varying make-up of lenders’ loan books, but the TSB, the 631-branch business spun out of Lloyds in 2014, was offered to the market at well below its net asset value before being taken over this year by Sabadell, the Spanish financial group.
Mr Duffy is the former chief executive of Allied Irish Banks and led the struggling Irish lender after its nationalisation by the authorities in Dublin. AIB is itself is in the process of preparing an IPO and Mr Duffy said that many of the investors he had met while in his previous job were looking at buying shares in Clydesdale.
“I know all these people and they know my record of execution,” he said. “A lot of people talk about challenger banks. Well, this is the only bank that is worthy of that word.”
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This month, NAB said that it had made substantial progress in its preparation for the flotation of Clydesdale, which Andrew Thorburn, the Australian bank’s chief executive, has said is a “priority” for the Australian lender.
NAB has made no secret of its desire to dispose of its British subsidiary, which has struggled in recent years as it has been hit by the cost of writing off bad loans and paying out millions in customer compensation. An earlier attempt to offload the business is understood to have failed on the issue of the size of the investor indemnity that NAB should provide.
The IPO will mark only the latest by one of the UK’s smaller banks, following the likes of Virgin Money, Aldermore and OneSavings.