CLYDESDALE bank’s former owner National Australia Bank has said it expects to record a loss of Aus$4.2 billion (£2bn) on the disposal of the Glasgow-based lender and its Yorkshire stablemate.

However the Australian group emphasised how pleased it was to offload Clydesdale, which it had described as a drag on growth.

In an update on trading the group told investors in Australia that it achieved a significant milestone earlier this month by completing a demerger of Clydesdale with Yorkshire Bank as CYBG.

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It continued: “The sale of 80 per cent of our life insurance business to Nippon Life, as announced in October 2015, marks our last major divestment of low returning and legacy assets.”

The bank said it was making progress with its focus on Australia and New Zealand without the distractions involved in running UK lenders.

But NAB confirmed that it had suffered a big accounting loss on completing the long awaited disposal of the UK banks. It achieved this by selling 25 per cent of shares in CYBG to institutions through an initial public offering which valued CYBG at £1.6bn. The remainder of the shares were allotted to NAB investors.

CYBG floated on the stock market on 3 February.

Based on the 180p per share price of the offering NAB said it expects to record a loss of around Aus$4.2 billion net of the costs of the transaction.

NAB bought Clydesdale for £420m in 1987. It acquired Yorkshire Bank for around £900m in 1990.

CYBG made no comment on the announcement by NAB.

However, the bank's chef executive, David Duffy, has said it is in good shape to win business from bigger rivals in the UK following the demerger.

NAB spent months readying CYBG for sale. It put in place an indemnity of up to £1.7bn to cover potential misconduct liabilities in respect of issues such as the mis-selling of Payment Protection Insurance by Clydesdale.

Shares in CYBG closed up 2p at 185p, compared with a listing price of 180p.