The Australian owner of Clydesdale Bank is considering fresh plans to sell the business as the UK banking sector returns to health, analysts have claimed.
Bloomberg reported that National Australia Bank (NAB) could raise £2.4billion on the sale of the business, with Santander thought to be a likely suitor.
The Glasgow-based bank is thought to be in recovery after rising bad debts forced the group to axe 1,400 jobs after revealing a £183million loss in 2012.
At the time chief executive Cameron Clyne said the bank had become over-reliant on commercial property, where bad debts were rising.
Clydesdale reported last year that it had returned to profit in 2013, with pre-tax profit of £127million as charges for bad debts fell £473million to £158million.
It is thought that NAB has been keen to sell the business after failing to grow it though acquisition since it moved into the UK market with its acquisition in 1987.
For years, analysts and NAB executives said Clydesdale was too small to generate acceptable returns. Outstanding loans at the business were £26.5billion at the end of September, compared with net loans of £110.5billion for RBS’s UK retail business.
NAB failed to acquire Abbey National in 2002 and said in 2009 it must expand in Britain or leave.
Banco Santander, which considered buying branches from RBS two years ago, is among possible suitors for Clydesdale as the local economy picks up, said Above the Index Asset Management, a shareholder in NAB. A sale would let NAB focus on more lucrative areas at home in Australia, said another analyst at Morningstar.
David Liu, Sydney-based head of research at Above the Index, told Bloomberg: “The improving UK economy will increase the interest in NAB’s British assets, which have possibly passed the worst of the bad-debt cycle.”
The improving economy has lifted valuations of Britain’s banks and increased the chance of a sale of Clydesdale, said David Ellis, a Sydney-based analyst at Morningstar.
“If the recovery in the UK continues during 2014, it’s going to become increasingly likely that that type of disposal will occur. There’s a general improvement in confidence,” he added.
A spokesman for the Clydesdale Bank said: “We never comment on market speculation.”