National Australia Bank (NAB) has urged its shareholders to support a proposed demerger of its Clydesdale and Yorkshire Bank (CYBG) at a special meeting on January 27, 2016.
NAB is proposing that 75% of CYBG would go to NAB shareholders and that 25% of shares be sold via an initial public offering to institutional investors.
The Australian bank said Clydesdale and Yorkshire was now in a position to be demerged to NAB shareholders and be listed as a standalone retail and small and medium business bank with a strong franchise across its core regional UK markets.
If the deal is approved, eligible NAB shareholders will receive one CYBG security for every four NAB shares they own.
CYBG is expected to have a primary listing on the London Stock Exchange (LSE) and a listing of fully fungible CHESS Depositary Interests (CDIs) on the Australian Securities Exchange (ASX).
Eligible NAB shareholders can choose to receive either CYBG shares or CDIs.
The demerger needs to be approved by the courts, shareholders and regulators but NAB hopes it will be completed by February.
NAB chairman Michael Chaney said NAB directors have unanimously recommended that NAB shareholders vote in favour of the demerger.
“Having assessed a number of alternatives, the NAB Board considers the demerger (in conjunction with the opportunity to undertake the IPO) is the best exit option and is likely to enhance value for NAB shareholders over the long term,” said Chaney.
“In recent years, NAB has taken a number of steps and initiatives to strengthen CYBG’s standalone position.
“The NAB directors are of the view that CYBG is now in a position to be demerged to NAB shareholders and be listed as a standalone retail and SME bank with a strong franchise across its core regional UK markets, a strong balance sheet and capital position, a robust business plan and operating platform, as well as an experienced management team.
“The demerger provides eligible shareholders with separate investments in NAB and CYBG and if they choose to retain their CYBG securities, the ability to benefit from any improvement in the UK economy and CYBG’s strategy and performance going forward.”
NAB group chief executive Andrew Thorburn said that after the demerger, the group’s focus and resources can be directed towards NAB’s core priorities in its Australia and New Zealand businesses.