National Australia Bank Ltd. (ASX: NAB) says it has finalised the divestment of its UK-subsidiary, Clydesdale and Yorkshire Banking Group (ASX: CYB). As a result, NAB's share price fell more than 4% today to $26.70.
NAB shareholders will receive one share in Clydesdale and Yorkshire Banking Group – worth roughly A$3.69 (180 pence at an exchange rate of 48.79 pence per Australian dollar) – for every 4 NAB shares they own – which makes up for some of today's price fall.
In a statement to the ASX, NAB said it has priced shares for the institutional component of its long-awaited demerger and initial public offering (IPO) of Clydesdale and Yorkshire bank. "This effectively concludes the demerger and IPO process for CYBG," the bank said.
Institutional investors will pay 180 pence for around 220 million shares, which will be listed on the London Stock Exchange under the ticker code CYBG. The price gives Clydesdale and Yorkshire bank a market capitalisation of around $3.2 billion.
The London-listed institutional shares will represent 25% of Clydesdale and Yorkshire bank shares while 75% will be allotted to current NAB shareholders and listed on the ASX.
"We are pleased with the response from institutional investors to the IPO, including from NAB shareholders, despite the recent significant market volatility," NAB CEO Andrew Thorburn said. "We wish CYBG CEO David Duffy and the CYBG group well as they prioritise and focus on achieving a strong future for CYBG customers and shareholders as a standalone entity."
From the IPO, NAB stands to realize proceeds anywhere between $700 million and $805 million. ASX-listed 'CDIs' or CHESS Depository Receipts are expected to commence trading on the ASX on a normal settlement basis on 17 February 2016.
The Clydesdale and Yorkshire Banking Group has had a troubled history, particularly in the post global financial crisis banking world which is characterized by increasing regulatory oversight. Costly allegations of misconduct have given rise to loads of media and regulatory scrutiny, ultimately forcing NAB to maintain and insure part of CYBG's balance sheet and protect against further provisions for a number of years.