Share market turbulence has forced the Australian owner of Clydesdale and Yorkshire banks to cut the price at which their shares will be floated on the London Stock Exchange next month.
The banks – to be known as CYBG – could be valued as low as £1.5bn when they are spun out of National Australia Bank (NAB), much lower than the valuations of closer to £2bn mooted when the demerger of the business was announced in October.
NAB is handing 75% of shares in CYBG to its existing shareholders and selling off the rest through an offering to institutional investors. Even if NAB decides not to press on with the stock market offering, it will still continue with the divestment of three-quarters of CYBG to its existing shareholders.
The Australian bank has spent years looks for a solution to its troublesome UK operations, which have been granted a £1.7bn indemnity against any further compensation for payment protection insurance or mis-selling of interest rate swaps to make them more attractive to outside investors.
CYBG’s new management has embarked on a roadshow to try to convince institutional investors of the merits of the bank, in a move that will be closely watched by rivals such as Metro that are thought to be considering flotations.
The price range is set at between 175p and 235p – giving a valuation between £1.5bn and £2bn. If the lower price is the one at which CYBG floats, it would value the bank at just 0.56 of its assets. The shares are expected to be priced on 2 February.
The flotation is taking place just as the stock market is being rocked by concerns about global growth, potential interest rate rises and the plunge in the value of oil. The tricky start to the year on financial markets has wiped almost $4tn (£2.8tn) off global shares in the worst opening weeks on record.
