Clydesdale shrinks, blaming downturn

 
Clydesdale Bank NAB bought Clydesdale Bank in 1987, and Yorkshire Bank in 1990

National Australia Bank has been reviewing what to do with its substantial UK operation, Clydesdale - which also owns Yorkshire Bank and operates mainly in Scotland and the north of England - since January.

Because of an economic downturn in the UK described by NAB's chief executive Cameron Clyne as "longer and slower to recover than experienced in the 1930s following the Great Depression", the bank has decided to cut 1,400 UK jobs, pull out of commercial property lending here and concentrate on retail and small business banking.

Mr Clyne says "heightened weakness in the eurozone" is "in part" to blame.

It also announced that the UK operation has fallen into a small loss, of £25m - and will take a charge of £150m for property loans going bad, blaming a double dip in the commercial property market.

But NAB has apparently rejected the option of selling Clydesdale and pulling out of the UK.

Earlier this year, it received a takeover offer for the business from NBNK, which is also trying to buy 632 branches from Lloyds, and turned it down.

A source at NBNK tells me that if its offer had been accepted, there would have been fewer job losses.

UPDATE 08:33 BST

As I am sure you know, what Cameron Clyne says about the longevity of this UK economic downturn is old news: economists have been pointing out for some time that if a depression is the period during which output remains below the previous peak, the UK is experiencing the longest depression since reliable records were compiled (and a longer depression than in the 1930s).

But what seems to be significant is that he should flag up the weakness of the recovery. Is it Aussie schadenfreude? Or is it, which would be more worrying, how big businesses on the other side of the world increasingly see the UK?

UPDATE 09:34 BST

For what it is worth, Cameron Clyne, chief executive of NAB, has been very dismissive of NBNK's attempt to buy Clydesdale, in a briefing to analysts overnight

He said: "Let me be quite clear, we've never received a formal offer for this bank. We've never rejected a formal offer...We have received informal and speculative expressions of interest, all of which are very low valuations and also highly conditional...so very difficult to execute."

Which is why NAB thinks shrinking Clydesdale (and Yorkshire) is preferable to selling the bank.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    0

    Comment number 222.

    ArthurDaley@221
    No to @219
    400ch
    @218 'many'!

    Of course, agree: for 'many', at home & at work, thinking "driver is short-term"

    Borg or Mammon, in 'overall possession' for millennia

    Vulnerable in youth, near ineducable beyond adolescence, human race will have to be lucky to survive

    In context of universe, might seem 'headed' for apoptosis or malignancy… but consider 'the strength of hope'?

  • rate this
    +1

    Comment number 221.

    219 AfA

    No, driver is short term profit & corp (ie 'Borg star trek') motivation for monopoly. Purpose of Gvnt is to destroy monopoly. When the Borg becomes bigger than the nation then Govnt cannot destroy market domination. Hence bailout. RBS book bigger than UK GDP. Borg is driven to achieve short term profit via assimilation/dominance. The problem will not go away. Borg has 80 yr approx cycle

  • rate this
    +1

    Comment number 220.

    @205.Comfortably Numb
    .. I've recently been watching the BBC programme 'The '70's'... it's sobering.

    The economic anaysis in the programme is weak, possibly because it tries too hard to portray the problems as being of the 70's when they were post war issues which merely came to a head in the 70's. might help if it was presented by someone actually old enough to remember the 70's properly

  • rate this
    0

    Comment number 219.

    ArthurDaley@217
    "manipulated"

    Behind the "manipulation", natural survival instincts, not just for self, for clients, company, even society: 'cruel to be kind', unto death

    'Selfish' or 'pragmatic', victims of antisocial 'perverse incentives', sold as inevitably foul 'human nature'

    Until near the end, ne regrette rein, even the rule of Mammon

    Fear & Greed, Too-Patient Innocence, Learned Cunning

  • rate this
    0

    Comment number 218.

    John_from_Hendon @216
    Trickle-Down Economics
    "intellectual… core of our tragedy"

    Purely 'intellectual'? And moral 'corruption'?

    Many, I'm afraid, sold on contempt and Greed, their counter-parties on contempt and Fear, all far from grasp of conditions for democracy, content to wear the cloak - and so debase 'democracy' in minds worldwide

 

Comments 5 of 222

 

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