CLYDESDALE Bank chief executive David Duffy has said he was pleased with the cut price flotation of the lender which he reckons can prosper as an independent despite being deemed a drag on growth by its Australian former owner.

Speaking after Clydesdale listed on the London Stock Exchange with Yorkshire Bank as CYBG, Mr Duffy said the Glasgow-based group had won a vote of confidence in its prospects from global investors against a challenging market backdrop.

The flotation came after National Australia Bank demerged CYBG. The group sold 25 per cent of the shares to institutions such as pension funds in an initial public offering priced at 180p a share. This gave CYBG a market capitalisation of around £1.6bn, near the bottom of the expected range.

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The flotation was delayed by a day after a credit rating agency asked for more information about Clydesdale.

However, Mr Duffy said: “We managed to deliver the transaction within the price range we set on time … that’s because investors from around the world were happy with our strategy and our plans and signed up. It’s been a very good outcome despite the choppy markets.”

It is believed the share offer was eventually four times oversubscribed. Shares in CYBG closed up 12p, seven per cent, at 192p after the first day’s trading.

“You have to see it as broadly pretty successful, especially when you consider the fact that the launch had to be delayed by 24 hours,” said Alastair McCaig, market analyst at the IG spread betting firm.

Asked if NAB should have held the IPO until stock market conditions improved, Mr Duffy said: “Frankly they needed to get the sale done and to get the capital back to support their economy, the same way that they got out of the US in its entirety so it was a much more strategic thing than the particular mood of the market in a given week.”

NAB had made clear it was keen to offload Clydesdale, which it said had weighed on profitability and absorbed management time. After spending months readying CYBG for sale, the Australian bank will focus on its local market.

Mr Duffy said the preparations for the demerger had left CYBG in good shape. It has around 4,200 employees in Scotland.

He noted: “This is one of the best capitalised banks in the UK. It’s got one of the lowest costs of funding in the UK, it’s got an indemnity against conduct issues that I couldn’t imagine spending in its entirety based on anything we’ve seen; it’s got a great franchise and very motivated people.”

NAB has provided Clydesdale an indemnity of up to £1.7bn to cover potential misconduct liabilities in respect of issues such as the misselling of Payment Protection Insurance.

“I think the problems we’ve heard about from the past they’re dealt with in a very material way,” said Mr Duffy. “It’s a wonderful starting point.”

The banking veteran believes CYBG can deliver double digit returns for investors despite facing competition from giants such as Royal Bank of Scotland.

“We have the ability to compete and do so successfully against the big banks and I think that we will do that increasingly going forward,” said Mr Duffy.

CYBG aims to grow mortgage and SME lending by eight per cent and four per cent annually respectively, while remaining a strong player in the current account market.

Mr Duffy said the focus will be on organic growth adding: “If something comes along given that we are the largest challenger in the market it’s logical that we would consider it.”

Asked to comment on talk CYBG could become a bid target, he said any bidder would have to offer to pay a healthy premium and achieve enhanced returns for shareholders to win a recommendation from the CYBG board.

But he added: “We’re agnostic. So long as shareholders get a return we’re fine with that.”

Seventy five per cent of the shares in CYBG have been allotted to shareholders in NAB and overseas investors will have a big influence on its future.

But chief financial officer Ian Smith said it was terrific for Scotland to have a new listed company with headquarters in the country.

Mr Duffy said the bank’s future was in the hands of staff, who would walk a little bit taller after Clydesdale regained its independence.

There may be some reshaping of the group as the company looks to achieve its promises to investors and customers.

Asked if any branches might be closed Mr Duffy said: “It’s very important to have a good strong branch architecture. We don’t know the exact size of it until we’ve done quite a bit of work on it.”

On the possibility of CYBG increasing employee numbers in Scotland, he said: “It depends on progress but our agenda is growth.”

Announcing plans last month to sell 25 per cent of the business to institutions, NAB set a price range of 175p to 235p for shares in CYBG. This would have valued the business at around £1.5bn to £2bn.

It bought Clydesdale for £420m in 1987 and paid around £900m for Yorkshire Bank in 1990

Private investors will be able to buy shares from firms that subscribe to the IPO and those allotted them in the demerger when trading goes unconditional on the London Stock Exchange on Monday, 8 February.