Eric Johnston Sydney Morning Herald 23 January 2013
ANALYSTS have urged National Australia Bank to push ahead with a sale of its troubled British business even as Spanish banking group Santander has knocked back reports it is contemplating a bid for the Australian bank's Clydesdale and Yorkshire business.
A spokeswoman for Santander told BusinessDay that it would not comment or make a statement on the news reports, but she confirmed that Santander UK had denied it was in talks to buy NAB's underperforming British banks. Following a rally in NAB shares on talk of a possible sale, they ended nearly 1 per cent lower on Tuesday at $26.59.
On Monday, Ana Patricia Botin, the chief executive of Santander UK, declined to comment on the bank's rumoured interest in Clydesdale and Yorkshire, but did say the bank was focused on organic growth.
While NAB has declined to comment on the reports, chief executive Came
Nomura banking analyst Victor German said regardless of whether the assets are sold, there remained a ''fundamental value'' in NAB.
He said that as the British assets were non-core for NAB, selling them would be appropriate for the Australian bank if there was a reasonable price offered.
''I think the amount of time that management has to divert into [the UK assets] and also the resources that have to go into managing this business are probably not worth the upside,'' Mr German said.
''I think if they're able to sell it at a reasonable price, it's the right thing to do, even though from a longer term perspective, maybe there is some value in the franchise.''
A report in London's Sunday Times triggered speculation that Santander wanted to bolster its British business before a planned listing in London, estimated at about £10 billion ($15 billion).
On Sunday, it was reported that Santander was considering a £2 billion bid for NAB's banks, which mostly operate in northern England and Scotland.
The speculation had been greeted with scepticism by analysts. But they added that any deal would have been positive for NAB.
Citigroup analyst Craig Williams said a sale at 0.9 times Clydesdale's book value would have seen as much as $1.2 billion returned to shareholder. However, any transaction would be a ''sentiment booster'' while group earnings will be barely unchanged.
''Shareholders would welcome the absence of management distraction and the ongoing dilution to group returns that the UK retail business represents,'' Mr Williams said.
Last year, NAB was plagued by falling earnings, a weak share price and millions of dollars in losses from its under-pressure British business.
With ERIC JOHNSTON