Scotland

Budget announcement is blow to Clydesdale Bank sale

Clydesdale bank branch Image copyright Getty Images

The surcharge tax on bank profits announced in the Budget is being seen as another blow for the sale of Clydesdale Bank.

Reports in Australia say that it could knock as much as £200m (A$425m) off its value.

The parent company of the bank plans to float the Glasgow-based lender in Australia later this year.

Chancellor George Osborne announced he was phasing out the bank levy.

He also announced plans to introduce an 8% surcharge on bank profits, in addition to corporation tax.

That knocked share prices of smaller UK banks which are already traded.

Large portfolio

A bank analyst at the Commonwealth Bank of Australia calculated that would knock A$425m off its valuation, and suggested that could push National Australia Bank (NAB) to sell off a larger stake in order to meet its target for raising capital.

A spokesman for the NAB was reported by the Melbourne Herald Sun saying the move would have no impact on the parent bank's earnings.

A spokesman in Glasgow for Clydesdale Bank, which includes the Yorkshire Bank brand, declined to comment.

Clydesdale Bank is seen at the Melbourne headquarters and in the Australian media as a drag on NAB, having amassed a large portfolio of bad property loans, and the high costs of redress for mis-selling financial products.

The new NAB chief executive, Andrew Thorburn, has made it a priority to split Clydesdale, handing up to 80% of it to NAB investors and selling the remainder on London and Australian exchanges.

Earlier this week, senior staff at NAB in Melbourne set out the case for investing in the spun-off UK bank, to institutional investors in Australia.

They portrayed it as one of the so-called challenger banks which is best placed to take on the British market's 'big five'.

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