Yorkshire and Clydesdale Banks report £139m losses

NATIONAL Australia Bank has seen full-year profits slump by 22% as its UK operations Yorkshire and Clydesdale banks reported a £139m loss.

Australia’s fourth biggest lender said it had made provision for AUS$250m (£161m) for bad debts at its British banks and its profits fell by more than AUS$1bn to AUS$4.1bn (£2.6bn).

David Thorburn, chief executive of Yorkshire Bank, said the UK banks’ restructuring programme was ongoing.

A strategic review was launched earlier this year in a move to make the operations more competitive. However, it will lead to around 1,400 job losses and see the Yorkshire focus on the North of England.

Mr Thorburn said: “We are making progress with implementing our strategy to become a stronger and more competitive business in what remains a very difficult economic environment. Our current restructure will simplify our business model and enable us to focus on our traditional strengths.

“The past year’s performance, however, demonstrates the need for the difficult steps we are taking. Underlying profits are down to £448m in the year with a cash earnings loss of £139m.

“In addition to higher funding and liquidity costs, this reflects the higher charges to provide for bad and doubtful debts which increased to £631m against a backdrop of prolonged economic uncertainty, particularly the
further deterioration in the commercial property market.

“The successful planned transfer of the vast majority of commercial real estate assets, £5.6bn before provisions, to NAB earlier this month is a significant step in further strengthening our funding position as well as improving our balance sheet structure going forward.”

The review has seen 468 staff lose their jobs so far.

NAB’s chief executive Cameron Clyne said its Australian and New Zealand businesses posted improved performances, but were overshadowed by problems in Britain.

He said: “The group result reflects both the strength of the core Australian and New Zealand banking businesses and ongoing challenges in the UK.”