UK banks owner launches review

Feb 7 2012

The Australian owner of the Clydesdale and Yorkshire banks has put its UK operation under review, fuelling uncertainty among its 8,300-strong workforce.

National Australia Bank (NAB) has given itself until May to complete the strategic review that will steel the business for a slow economic recovery.

The overhaul is expected to shrink the size of its UK operation, which has 337 branches, although reports in Australia have said it may look to renew efforts to exit the UK market altogether.

Yorkshire Bank was founded in 1859 in Halifax, West Yorkshire, and has 185 retail branches, while Glasgow-based Clydesdale, which was bought by NAB in 1987, has 152 outlets.

The company employs 4,200 people in Scotland, and Labour MP for Kilmarnock and Loudoun Cathy Jamieson urged the company to reassure workers.

She said: "Staff will be worried about what this means for jobs and careers and we need urgent clarification from the company on its intentions. The Clydesdale has a long and proud history in Scotland. I know the staff employed in the branch network and telephone operations in Scotland are highly valued by the company and they will want early reassurance."

While the UK operation remains profitable, NAB said the division's margins were squeezed due to higher funding costs, while lending activity was subdued and fees lower as a result of weaker economic activity.

Its charge for bad debts was also higher in the first quarter of the company's financial year as the "slow and fragile" pace of the economic recovery continues to impact customers.

David Thorburn, chief executive of the Clydesdale and Yorkshire banks, said: "The time is right for us to re-examine our business given the recent reversal in the economic recovery, the structural changes in the UK banking market and our performance in that context."

He pledged to continue to support the company's branch network and its saving and mortgage operations. Mr Thorburn added: "Although reshaping the business will mean that we will have to take tough decisions, we are confident that the outcome will provide a strong and sustainable future for Clydesdale and Yorkshire banks."