Credit concerns delay a “non-issue” as Clydesdale shares close 5 per cent up after day one

Shares in Clydesdale and Yorkshire Banking Group (CYBG) closed 5 per cent up to 192p last night after its debut on the London Stock Exchange yesterday morning.

The flotation came after National Australia Bank demerged Glasgow-based CYBG and sold 25 per cent of the shares to institutions such as pension funds in an initial public offering priced at 180p a share - the lower end of a range offered to investors in the run-up to the flotation as a result of volatile financial markets.

David Duffy, the bank’s chief executive, hailed a “landmark day” for the newly-independent UK challenger bank.

The flotation had been delayed by a day after an unnamed ratings agency had raised questions about a tranche of the bank’s secured funding balances.

But Clydesdale’s chief finance officer, Ian Smith, dismissed the concerns as “perfectly manageable, practically a non-issue”.

Mr Smith, a former partner with Deloitte who lives in Kinross, added: “In an environment where you are asking people to make an investment, you owe it to them to share all pertinent information to them and they were very comfortable with it. The bank has an investment grade rating from three rating agencies. There’s no issue over any of that.”

Mr Duffy said that the decision to delay the IP marked a new level of trust between banks and shareholders and a change for relations in a sector that has been tarnished since the banking crisis.

“We postponed it for a day and give our shareholders absolutely a chance to have an open discussion about it make sure they are comfortable before proceeding. Every single one of them made the comment that this was very good to see in the prospective new relationship.

“We are very confident in the register, so we didn’t have any concerns about delaying it 24 hours. We said this was about re-setting the company and shareholder relationship, and you should trust us we will always be transparent and open.”

The CYGB IPO comprised an offer of a 25 per cent stake in CYBG by NAB. At the same time, a demerger of National Australia Bank’s remaining 75 per cent stake in CYBG is being effected through a distribution of shares to the parent’s own shareholders.

NAB had made clear it was keen to offload Clydesdale, which it said had weighed on profitability and absorbed management time.

“We are pleased with the response from institutional investors to the IPO, including from NAB shareholders, despite the recent significant market volatility,” said NAB Group chief executive officer Andrew Thorburn.