In its full year results, NAB said that "significant progress has been made on the proposed transaction, including advanced engagement with key regulators and listing authorities in both jurisdictions".
It said that the proposed demerger and IPO remains subject to a range of matters, including various court and regulatory approvals and NAB shareholder approval. Shareholder approval will be sought at a meeting expected to be in late January 2016.
In order to achieve the proposed demerger and IPO, the UK PRA requires capital support for CYBG of £1.7 billion in relation to potential future legacy conduct costs. Currently, a provision of £774 million is held with respect to complaints and redress issues arising out of historic sales of PPI.
NAB admitted that there remain risks and uncertainties in relation to ultimate costs of redress and related costs, including the number of PPI claims, the number of those claims that ultimately will be upheld, the amount that will be paid in respect of those claims, the impact of the Supreme Court decision in Plevin v Paragon Personal Finance (including the impact of any new FCA rules or guidance issued further to that decision) and any additional amounts that may need to be paid in respect of previously handled claims.
NAB’s intention to exit the UK Banking business was first signalled in October 2014 following a fall of nearly 10% in full-year profits, largely due to provisions relating to a misconduct over insurance policies.
During the March 2015 half year, a £21 million fine was issued to Clydesdale Bank in relation to its management of PPI claims.
NAB intends to pursue a demerger of approximately 75% of CYBG to NAB shareholders and a sale of the balance by way of IPO (up to approximately 25%) to institutional investors. It is proposed that CYBG will have a primary listing on the London Stock Exchange and a CHESS Depositary Interest listing on the Australian Securities Exchange.
