The bank said it will use the money to strengthen its balance sheet and to create a buffer for adhering to tougher regulatory requirements.
About 70% to 80% of the bank’s shares will be transferred to the existing shareholders of NAB, reported the BBC. Institutional investors will be given the remaining shares in the new entity called lisco.
NAB that will present the complete break-up of the transaction by the end of the year will list the shares on both the London Stock Exchange and the Australian market.
NAB CEO Andrew Thorburn was quoted by The Guardian as saying: "In relation to exiting our UK banking business, we have been examining a broad range of options including those provided by public markets.
"It is a priority to exit this business, and we are today announcing our intention to pursue a demerger and initial public offering of the UK banking business."
NAB’s Melbourne headquarters announced the decision of the demerger. The bank has been trying for years to sell the Clydesdale that represents the bank’s European retail division.
Previously, the bank had been asked to pay up to £1.7bn by UK regulators to protect it from the costs of mis-sold financial products, reported The Guardian.
Recently, regulators fined Clydesdale for £20.7m owing to the treatment it meted out to around 100,000 customers who were seeking payment protection insurance (PPI) payouts.
