Clydesdale pledges £4bn for Scots homebuyers and firms

Published on Wednesday 28 October 2009 20:28

SMALL firms and housebuyers were offered £10 billion of support from Clydesdale Bank yesterday as it turned up the heat on its bigger rivals.

The Clydesdale and Yorkshire banks, part of National Australia group, pledged the funding over the next two years yesterday despite posting a 68 per cent fall in annual profits.

About 4bn will go to Scotland, split evenly between business and mortgage lending, Clydesdale said.

The pledge follows 4bn of overall business and mortgage lending by the banks, which form the UK arm of NAB, in the year to end-September when pre-tax profits dived to 108 million.

That figure compared with 343 million in the previous 12 months as a "significant deterioration" in the economic environment saw bad and doubtful debts hit 421m from 175m.

Lynne Peacock, chief executive of Clydesdale and Yorkshire, said the group would "continue to avoid the excesses of the sector" despite the new lending commitment.

She said many senior managers in the UK would know in advance how much they had to lend over the next two years as Britain is expected to emerge from recession.

She said: "If you are in Aberdeen or Dundee, the local people will know what they can do in lending over the coming year as they go out into the local community. We will break it down, but the figure will be a minimum. They can ask for more."

Peacock said consumer sentiment was better than a year ago, but that it was too early to call a turn in the banking market.

She said she thought a flight to conservatism when the banking sector was in turmoil a year ago following the collapse of Lehman Brothers, with people switching their funds to banks deemed less risky, was "past the peak".

Clydesdale lent 2bn to businesses in the year and 1.8bn in new mortgages.

David Thorburn, chief operating officer, said the 10 per cent rise in business lending was against the backdrop of a subdued market.

"Agriculture is a standout (for lending]. This is partly driven by commodity prices and we have always had a strong reputation in the agriculture sector."

Peacock would not be drawn on whether Clydesdale would target Northern Rock after the nationalised bank received clearance from European regulators to be broken up, paving the way for a sale.

She also would not say whether Clydesdale had looked at Scottish-based Standard Life Bank, recently sold to Barclays, stressing that organic growth remained the group's priority.

&#149 National Australia Bank's annual earnings fell just under 2 per cent to AUS$3.8bn (2.08bn) in the trading year, it said yesterday.