Shares of National Australia Bank Ltd. (ASX: NAB) are trading firmly higher following an ASX update this morning.
In an announcement to the ASX, NAB said the proposed demerger of its UK subsidiary, the Clydesdale Yorkshire Banking Group (CYBG) is proceeding. It said the performance of CYBG in the three months to 31 December 2015 was in-line with expectations, noting a 6.6% growth in the bank's loan book and "strong" asset quality.
CYBG has long been a lagger for the NAB Banking Group and is often blamed for the bank's relatively poor share price performance. Indeed, many NAB executive management teams have come and gone trying to rid the bank of its poorly performing assets.
Under the control of CEO Andrew Thorburn, however, NAB has divested its US bank, sold most of its insurance business to Japan's Nippon Life, and is now pushing ahead with the divestment of CYBG in 2016.
It's NAB's intention to divest 75% of CYBG to current shareholders, listing the new shares on the ASX, with the remaining 25% going to new institutional owners on the London Stock Exchange.
Foolish takeaway
NAB shares have long underperformed their peers, largely thanks to its poorly performing non-core banking assets in the UK and, to a lesser extent, the USA. While CEO Andrew Thorburn has done a great job thus far reducing the bank's exposure to these assets, I think there are superior alternatives in the ASX financial sector to consider buying first.
