TSC report could hurt NAB’s UK exit

TSC report could hurt NAB’s UK exit

Loan mis-selling allegations levelled at Yorkshire Bank and Clydesdale Bank could delay parent company National Australia Bank’s plans to leave the UK, a business recovery specialist has said.

In November 2014, chief executive Andrew Thorburn said NAB intended to float Clydesdale Bank on the London Stock Exchange, with the aim of raising £2bn.

However, Glenn McDowall, director of Global Advisory Group, warned that a scathing report from the Treasury select committee may have delayed NAB’s chances of an orderly exit.

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He said: “The chance of NAB being able to float Clydesdale and Yorkshire banks, sell off its commercial property debt to [private investment firm] Cerberus and leave the UK, without having lost any money, are fading rapidly, if indeed they were ever realistic.”

The 80-page TSC report, Conduct and Competition in SME Lending, published earlier this month, scrutinised NAB and others over allegations of interest rate swap mis-selling.

Following the TSC’s report, there were questions in the Australian Senate about NAB, with Sam Dastyari, chairman of the senate committee on economics, writing to TSC chairman Andrew Tyrie MP about the report. Mr Tyrie confirmed he received the letter on 23 March.

In the UK, an action group for small business customers of Clydesdale and Yorkshire banks called on the FCA to urge NAB to broaden its review into the mis-selling of complex loans.

Clydesdale Bank had been censured by the FCA in 2013 for mis-selling tailored business loans to small businesses. Clydesdale Bank was also fined in 2013 by the FCA for a miscalculation on 42,500 mortgage customer accounts.

The NAB, which bought Clydesdale Bank in 1987 and Yorkshire Bank in 1990, faces huge costs from the fallout. Last February, it announced it would have to increase its provisions against anticipated claims.

A spokesman for Clydesdale Bank and Yorkshire Bank said: “We have made good progress in our review of complex tailored business loans and in paying suitable redress to our customers, if necessary. We have also reviewed almost all complaints about fixed rate TBLs and are in the process of making payments or formalising offers where appropriate.

“We are confident that our review is completely in line with FCA guidance, and the outcomes we reach in considering complaints takes into account the findings from the Ombudsman.”

Analyst View

Ray Galt, director of Glasgow-based Macarthur Denton Asset Management, said that the mis-selling allegations were “quite dispirting but not surprising. Once again we see selling weighted in the bank’s favour, not the client. There will be more to come, so the journey is long.

“There is reputational damage with a knock-on effect on financial services, as people do not trust the banks and this lack of trust spills over into not trusting financial advisers.”