In the share market winners often keep on winning, but losers can keep on losing.
Ever since the National Australia Bank Ltd (ASX: NAB) spun off its troubled UK subsidiary Clydesdale & Yorkshire Bank (ASX: CYB) in 2016 some value investors have tipped it as 'cheap' or a good buy.
However, the stock is now down more than 50% from its effective spin off price and 66% over the past year, with its pre-spin-off regulatory problems still weighing it down.
The latest hammer blow being that "it expects to increase its provisions for legacy PPI costs by between £300 million and £450 million." The costs relate to potential compensation due to customers over the mis-selling of insurance and other financial services products prior to 2016.
Regulatory problems aside, Clydesdale & Yorkshire Bank as a UK regional lender also struggles with a weak competitive position in regional parts of the UK that deliver sluggish economic growth in themselves.
The bank is also hampered by capital adequacy requirements that limit its return on equity.
