Friday, September 18, 2020

Owner of CYBG could be forced to cut float price

Rocked by institutional investor concerns over potential rises in interest rates, the drop in the value of oil and global growth, the financial markets have seen almost £3tn wiped off share prices in recent weeks.

Against this backdrop, the Australian parent company of Yorkshire Bank couldn’t have timed its proposed IPO at a worse time.

When Clydesdale and Yorkshire Bank Group demerges from National Australia Bank (NAB), 75 per cent of the bank’s shares will be sold to NAB shareholders, and 25 per cent to institutional investors through the IPO.

Investors had been expecting shares to be offered at a discount from the bank’s book value said to be around £2bn, but the discount could be even greater than anticipated given the slump in global shares in January.

The Australian bank, which has already been troubled by their UK operations, were granted a £1.7m indemnity against any further compensation for payment protection insurance or mis-selling of interest rate swaps to make them more attractive to outside investors.

But, with almost £3tn wiped off share prices in recent weeks the Australian company may have its work cut out to convince institutional investors of the merits.

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