Wait and see: NAB's plans for its British arm are on hold ahead of the Scottish secession vote. Photo: Getty Images
Just as NAB's British business is starting to stage signs of recovery, shareholders face another source of uncertainty from the troubled overseas arm: a Scottish independence vote.
In four months Scotland will hold a referendum on secession from the United Kingdom, a move that would spark financial upheaval and raise significant risks for banks, including NAB-owned Clydesdale Bank, the country's third largest.
Scotland's lenders are turning an eye to the potential fallout from a vote in favour of independence, including changes in the currency, doubts about implicit government support, and higher costs.
Lloyds was the latest lender to highlight the uncertain environment, last week conceding it could not guarantee in which currency accounts would be held if the country opted for independence.
Credit ratings agencies are also predicting that independence would unleash serious disruption - with Standard & Poor's even saying the country could face a similar situation to Iceland during the global financial crisis.
While surveys show the no vote is slightly ahead, the issue is another complication for NAB to grapple with just as the British economy is finally recovering and supporting stronger profits in financial services.
Morningstar head of Australian banking research David Ellis said there would probably be extra costs and regulatory complexities if Scotland seceded from the UK.
''It adds a bit of uncertainty, which ratchets up the concern levels a little bit,'' Mr Ellis said.
NAB is looking to dispose of its UK assets if it can get a good price, but Mr Ellis said any sale was unlikely to occur before the vote on secession had taken place.
''Whilst there's uncertainty I imagine NAB can stay the course until it can get a reasonable price for its assets,'' he said.
Key issues raised by a yes vote would include the currency and the implicit support that government provides Scotland's super-sized financial sector.
A UK Treasury paper argued Scottish financial services were worth 1254 per cent of the country's gross domestic product - a higher share than Iceland's banks before the financial crisis. Given this size, S&P said an independent Scotland might not be able to fund a deposit insurance scheme.
Because it is unclear how central banking arrangements would work, there are also questions about whether Scottish banks would have access to a lender of last resort if the country opts for independence. NAB has flagged the issue to investors and says it is watching the situation closely.
At its latest results this month NAB described the Scottish independence vote as a ''potentially important factor in the outlook,'' and said the situation remained uncertain. It said particular questions in the debate were the currency system, whether Scotland would be a member of the EU, and how UK-wide financial institutions would operate.
NAB chief executive Cameron Clyne, who has chaired the board of NAB's UK banks, said NAB had a ''well-developed program'' for dealing with possible outcomes from the vote.
''It generates uncertainty, but it's not in Scotland or England's interest to have a catastrophic outcome, if it is a yes vote,'' Mr Clyne said.
Meanwhile, improving conditions in the UK economy have allowed Clydesdale, which also operates Yorkshire Bank, to make a better contribution to NAB's bottom line. Cash earnings from the two soared 55 per cent in the past six months to £73 million ($131 million) , helped by lower bad and doubtful debts.
Andrew Thorburn will replace Mr Clyne as CEO in August, and the incoming boss has vowed to fix the British operations as a high priority.