A "good bank, bad bank" solution is under discussion at National Australia Bank concerning its underperforming Clydesdale Bank franchise in the UK,
Reuters reported.
NAB is likely to separate out the retail banking and small business banking operations of Clydesdale from its commercial real-estate business in the UK, the news service reported.
The plan under discussion calls for an early sale of the retail bank, which should be easier to sell under this revised model. One interested party in these discussions will be NBNK Investments, which has expressed interest in Clydesdale Bank in the past.
Reuters reported that the retail and small business activities of Clydesdale earn a return on equity of more than 10 per cent.
However, the ROE from commercial real estate is "bordering on negative", according to the news service.
In the first week of February, NAB said it had commenced a strategic review of its banking business in the UK.