Clydesdale stock lifts on London debut

NAB’s spin-off welcomed by the market, with shares 6.7 per cent higher at the close.

National Australia Bank CEO Andrew Thorburn at the National Australia Bank scheme meeting on the demerger of Clydesdale Bank in Melbourne, Wednesday, Jan. 27, 2016. (AAP Image/Tracey Nearmy) NO ARCHIVING

Clydesdale Bank shares have risen on their London market debut, with investors welcoming the float following its last-minute delay.

At the close, National Australia Bank’s UK spin-off had lifted to 192 pence ($3.92) per share from its IPO price of 180p ($3.69).

Despite initially jumping several pence at the market open, the stock reverted to 180.5p over the course of its first hour.

But positive investor sentiment soon pushed it back steadily towards a 6.7 per cent gain for existing shareholders by the end of the session. At its peak it reached 192.75p.

The float had been subject to a last-minute delay this week, which saw trade commence 24 hours later than initially scheduled.

But analysts said trade seemed unaffected by that minor hiccup.

At 192p per share, Clydesdale would have an implied market capitalisation of £1.69 billion ($3.45bn).

That is less than 50 per cent of the bank’s book value prior to the spin-off, and sharply below NAB’s initial pricing hopes of up to 235p per share for the float.

One quarter of the stock had been offered to institutional investors, and will be fully tradeable only from February 8, after a week of conditional trading between City investors.

The remaining three quarters begins its listing under the ownership of NAB’s existing shareholders.

Clydesdale’s shares, which will begin stand-alone trade on the Australian Securities Exchange on Thursday morning, are listed under the code CYBG.

The debutante’s gains came despite market softness in the wider British banking sector, with the FTSE 350 banking index down more than 3.5 per cent at the end of trade. That index is now down around 18 per cent this year.

Peers Standard Chartered and HSBC were among the worst performers, down a respective 4.3 per cent and 3.9 per cent at the close.

Concerns around global economic weakness and revised interest rate policy expectations are weighing on the sector, amid market repricing out the likelihood of an initially expected three to four Federal Reserve rate hikes this year.

The concerns last week pushed the UK government to postpone the sale of a £2 billion ($A4.10bn) share parcel in Lloyds Banking Group, originally slated for this spring.

“With these turbulent financial markets, now is not the right time to have that sale,” Treasury chief George Osborne said.

Recent earnings updates from UK banks have also disappointed the market.