National Australia Bank Hosts "Beauty Parade" to Assist with Northern Rock Auction

Strategic Insights -

National Australia Bank (NAB), the owner of Clydesdale and Yorkshire banks in the UK, has been hosting presentations from top investment banks, including Lazard, Citigroup, CSFB, and Morgan Stanley, to assist with the auction of Northern Rock. The move comes as Northern Rock is returned to the private sector and major UK banks, Royal Bank of Scotland and Lloyds Banking Group, are forced to sell off hundreds of branches. NAB aims to become a major player in the UK banking industry, but faces stiff competition from supermarket Tesco and Sir Richard Branson's Virgin Money, which previously came close to buying Northern Rock.

Key Takeaways:

  • National Australia Bank (NAB) has held a "beauty parade" of potential investment banking advisers to assist with the auction of Northern Rock.
  • The presentations were hosted by NAB and attended by top investment banks, including Lazard, Citigroup, CSFB, and Morgan Stanley.
  • NAB aims to become a major player in the UK banking industry as Northern Rock is returned to the private sector and Royal Bank of Scotland and Lloyds Banking Group are forced to sell off hundreds of branches.
  • Northern Rock was left with two entities: a "good bank" with approximately £19bn in savings and £10bn of mortgages, and a "bad bank" - Northern Rock Asset Management - which has the majority of the loan book.
  • NAB has 8.3 million customers in 10 countries and is one of Australia's largest banks.
  • Tesco and Sir Richard Branson's Virgin Money are potential competitors for banking assets in the UK market.
  • Northern Rock was nationalized in February 2008 and was the first banking victim of the credit crunch.

Statistics:

  • £19bn: approximate value of savings in Northern Rock's "good bank"[1]
  • £10bn: approximate value of mortgages in Northern Rock's "good bank"[1]
  • £19bn + £10bn = £29bn: total value of assets in Northern Rock's "good bank"[1]
  • 140 years: last bank run in the UK before Northern Rock's center stage in 2007[2]
  • 2007: year in which Northern Rock became the first banking victim of the credit crunch[2]

Sources:

  • [1] National Australia Bank Hosts "Beauty Parade" To Assist With Northern Rock Auction, The Observer (no date provided)
  • [2] The Observer, Northern Rock: We were given the keys to the castle and left it in our critics' hands, article by Robert Peston (no date provided)