The Australian owner of Clydesdale Bank has made its strongest intervention yet in the independence debate, warning that a Yes vote could bring with it a “significant” rise in costs.
The alert, from National Australia Bank (NAB), came as the group also said that Clydesdale faces an additional hit of at least £245 million to cover the cost of mis-sold loan insurance and complex interest rate swap products.
NAB’s new chief executive, Andrew Thorburn, said: “The Scottish independence vote takes place on 18 September and a vote in favour of independence may give rise to significant additional costs and risks for Clydesdale Bank.”
Thorburn, who recently succeeded Cameron Clyne as the Melbourne-based group’s chief executive, added: “We continue to closely monitor the situation and have appropriate contingency planning in place.”
Clydesdale boss David Thorburn – no relation to the NAB group chief executive – was not available for comment today and a spokesman for the Glasgow-based lender refused to say whether the group’s “contingency planning” involved the creation of English-registered companies.
In February, Edinburgh-based pensions group Standard Life revealed it had already started setting up additional registered companies outside Scotland “into which we could transfer parts of our operations if it was necessary to do so”.
A growing list of Scottish firms – including Aggreko, Alliance Trust, Iomart, Royal Bank of Scotland and Weir Group – have expressed fears in recent months over the outcome of September’s referendum, which is now less than a month away.
Thorburn’s comments came as NAB delivered a third-quarter trading update, in which it said Clydesdale faces an extra hit of at least £75m because of higher running costs for its programme of compensating customers mis-sold payment protection insurance (PPI).
The group added: “Significant additional provisions for PPI redress are also likely to be required at the full-year result in relation to new developments, including the implementation of a new complaints-handling process, which is likely to lead to increased payments for new complaints and in revisiting closed complaints… and the fact that Clydesdale Bank is subject to an enforcement process with the Financial Conduct Authority in relation to its previous PPI complaints-handling process, the outcome of which is not yet known.”
The PPI bill at rival Lloyds Banking Group now stands at almost £10.5 billion, while fellow bailed-out firm Royal Bank of Scotland has set aside £3.25bn.
In May, Clydesdale said that its PPI mis-selling provisions totalled £386m, while it had also set aside £181m to compensate small businesses that bought complex swap products, which were marketed by the banking industry as protection against rising interest rates.
The lender is also expected to make further provisions of at least £170m for redress linked to the sale of the interest rate hedging products.
Although NAB’s profits rose 7 per cent to A$1.6bn (£891.4m) in the third quarter, Thorburn said the group’s UK operations, including Yorkshire Bank, “still face a number of challenges”.
He added: “Like all large businesses there are things we can do better at NAB and we will have more to say on this at our full-year results on 30 October.”