Of Special Interest


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6th September 2011

NBNK to buy Lloyds branches, Clydesdale & Yorkshire banks?

The Financial Times reports that NBNK in negotiations to buy Clydesdale and Yorkshire banks from National Australia Bank simultaneously with its negotiations to buy the 632 branches for sale from Lloyds Banking Group.

The benefits of completing on the two deals would be both in critical mass and more importantly the NAB purchases would provide the processing and infrastructure for the Lloyds branches. NAB have said on more than one occasion that the existing Clydesdale and Yorkshire Banks did not have enough scale and their operation in the UK would have to get larger or close. NAB is understood to have registered interest in the Lloyds branches purchase but then not bid in the first round which had been thought strange.

The newspaper reports NBNK and NAB have been in talks for some weeks. They will have to decide before the end of this month, the final date for the Lloyds' branches bid to be placed. Although described in shorthand as Lloyds branches the sale also includes the Cheltenham & Gloucester and Intelligent Finance brands. The sale was a requirement of the European Commission as a remedy for the state aid received. Clydesdale Bank has almost all of its branches in Scotland with a handful of business centres and flagship branches in England. Yorkshire has most of its branches in Yorkshire and other parts of the North of England. Clydesdale & Yorkshire together have around 340 branches.

NBNK is an investment vehicle created and chaired by Lord Levene.
It is suggested that NBNK is seeking to raise £8bn (€9.1bn $12.9bn ¥992bn Y82.5bn) from investors and that the sale price for the Lloyds assets is around £2bn and perhaps around £1.5bn for Clydesdale and Yorkshire Banks. The NBNK vision is likely to be attractive to regulators, politicians and the public with the formation of new 6th force in UK retail branches led by a board of highly experienced individuals.