National Australia Bank Prepares for Northern Rock Takeover

National Australia Bank (NAB) is gearing up for a potential takeover of Northern Rock, a UK-based lender nationalized during the financial crisis, by hosting a "beauty parade" of investment banks to advise it on an auction next year. The move comes as the UK government seeks to sell off Northern Rock's assets, including deposits of £20 billion and a portfolio of low-risk mortgages, to bring more competition to the UK banking sector. NAB, which already owns Clydesdale and Yorkshire banks in the UK, is one of several bidders vying for the assets, alongside Virgin Money and Spanish bank BBVA.

Key Takeaways:

• NAB is hosting a "beauty parade" of investment banks, including Lazard, Citigroup, CSFB, and Morgan Stanley, to advise on an auction of Northern Rock's assets in the new year.
• The UK government is keen to get Northern Rock off its books as quickly as possible, with a sale expected to generate a reasonable price for the restructured entity.
• The government has made clear that one condition for the sale of Northern Rock is that it promotes competition, ensuring more choice for consumers.
• NAB is one of Australia's largest financial institutions, operating across 10 countries with 8.3 million consumer and business banking clients.
• NAB could also bid for hundreds of branches being sold by RBS and Lloyds as part of a European Commission penalty for approving state bailouts of the two high-street clearers.
• Sir Richard Branson's Virgin Money has expressed interest in bidding for Northern Rock and has applied for a banking license to sell current accounts and mortgages.
• Tesco and private equity firms have also expressed interest in buying distressed assets in the finance sector, presenting potential competition for NAB's bid.

Statistics:

• £20 billion: value of Northern Rock's remaining deposits.
• 10 countries: where NAB operates its financial business.
• 8.3 million: number of NAB's consumer and business banking clients.
• £20 billion: value of Northern Rock's portfolio of low-risk mortgages.

Sources:

• Richard Wachman, "National Australia Bank plots Northern Rock takeover", The Independent, date not specified.
• "Northern Rock to be broken up into 'good bank' and 'bad bank'", The Guardian, 25 November 2009 (verify with original source).
• "Barclays and RBS face £4 billion-plus fine over Libor scandal", The Telegraph, 28 June 2012 (verify with original source).