Clydesdale Bank completes turnaround ahead of schedule

By Douglas Fraser
Business and economy editor, Scotland


Clydesdale Bank has completed its turnaround plan ahead of schedule, according to its parent company in Melbourne.

Including its Yorkshire Bank subsidiary, the 18-month programme has involved a cut of 1,400 staff.

The Glasgow-based lender reported a pre-tax profit of £127m in the year to September, contrasting with a loss of £183m in the previous year.

Its underlying profit would be higher, but it has had to set aside an extra £130m as compensation for mis-sold payment protection insurance protection.

That brings the total set aside to £152m.

Chief executive David Thorburn said the recovery would not be complete until such "conduct-related matters" are concluded.

"We have learned lessons from this," he added.

In October last year, Clydesdale Bank transferred its £5.6bn, loss-making commercial real estate lending portfolio to its Australian parent company.

'Customer focus'

National Australia Bank had considered selling its UK bank, but decided to carry out the restructuring and turnaround programme itself.

Without the real estate losses, Clydesdale reduced business lending by £1.8bn. It cut bad and doubtful debt in the last financial year from £473m to £158m.

It reported that its mortgage lending has grown by 7.5%, ahead of the wider mortgage market.

It has also invested in improved mobile banking, and had to pay for the software to allow for the regulator's requirement of fast account switching between banks.

Mr Thorburn said: "The restructuring of or business over the past 18 months has been substantially completed a year ahead of schedule. This, along with the stable economic environment, helped in recording pre-tax cash earnings of £127m in the year.

"We're building a different bank today with a clear customer focus. While the re-shaping is largely done, there's more to do as we build a sustainable future for our business".

Doubtful debts

Commenting on the UK part of National Australia Bank, group chief executive Cameron Clyne said: "Further progress against the UK restructuring agenda, combined with some improvement in the UK economic environment, has supported a better operating performance from the UK businesses particularly in terms of lower bad and doubtful debts.

"Pleasingly, the run-off of our NAB UK CRE (commercial real estate) book has continued, and it now stands at £4bn gross, £1.6bn lower than when the portfolio was transferred to NAB in October 2012."

The bank's Melbourne headquarters reported a loss of £239m on that former Clydesdale portfolio, with bad and doubtful debts reducing from £185m in March to £119m at the end of September.

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