News Column

ANY thoughts the banking sector might be coming out of... [Derived headline]

August 19, 2014

ANY thoughts the banking sector might be coming out of the substantial dip it has been in surely have to be tempered.

While on an operational level most in the sector appear to be performing better, undoubtedly helped by improving economic sentiment, significant past misconduct continues to haunt them.

Worryingly, there appears to be little end in sight to the various mis-selling scandals with the only certainty being more compensation payments for customers.

For Clydesdale Bank this is a particularly tough pill to keep swallowing.

David Thorburn and his team have completed a painful restructuring of the business and look to have the underlying business pointing in the right direction.

But another pound(s)245 million in provisions is unlikely to see parent National Australia Bank look upon its UK operation more fondly.

New NAB chief executive Andrew Thorburn, no relation to his UK counterpart, has made it clear he would like to offload non-core assets as quickly as possible.

It remains to be seen whether Clydesdale itself is non-core - large sections of the NAB shareholder base would tell you it is - but finding a buyer for it will be difficult.

Options such as accepting a below-market price for its UK arm or guaranteeing the continuing conduct provisions as part of a sale are unlikely to satisfy shareholders, while a flotation also carries risks. There is a feeling Clydesdale too would benefit from a clear strategy, and perhaps a break, from its owners.

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Source: Herald, The (Scotland)

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