Clydesdale owner cuts 1,400 jobs as financial solutions centres axed

Clydesdale Bank’s Australian owner announced earlier today it was drastically scaling back its operations in England in a move that would account for the bulk of 1,400 job cuts across the group,

• Most of the cuts will affect southern England

• Only 60 jobs expected to be lost in Scotland

• Banks’ owner blames downgrade in UK growth

National Australia Bank will shut 29 of its 73 “financial solutions centres”, mostly in the south, following a wide-ranging review of its Clydesdale and Yorkshire bank operations that will save £74 million a year.

It blamed the cuts on the faltering British economy and an over-reliance on commercial property.

Scotland will be spared the worst in the restructuring, with about 60 jobs being axed and four financial solutions centres, offering business advice, closing.

The bank said the UK network of 337 branches will be retained as its focus switches to retail and small business banking.

The jobs cull is equal to 17 per cent of the workforce and the changes are aimed at stablising NAB’s UK business. Group chief executive Cameron Clyne said there would be no acquisitions and admitted that NAB had restructured the UK business after failing to find a buyer. It was the first time he had publicly admitted that he would be prepared to sell the UK banks.

“Growth through acquisition in the UK is not an attractive option and one I am prepared to rule out,” he said. “While there’s been much speculation about the prospects for an outright sale of Clydesdale Bank, the reality is that, given current pricing of listed UK banks and the difficulty in executing a clean sale, it is unlikely to be a realistic option which could provide value for NAB shareholders.

“While I’m unhappy with returns currently being generated by the UK, I’m confident the strategy we’ve outlined puts Clydesdale Bank on a path to more acceptable returns with lower risk. These are hard decisions but they are the right decisions.”

NAB announced the changes alongside a £25m loss in its UK division for the six months to the end of March, compared with a £77m profit in the previous year, reflecting a higher charge on bad debts and higher funding costs.

There was a £141m write-down to the value of the UK division and an additional £120m set aside to cover mis-sold payment protection insurance.

The UK division’s balance sheet will be strengthened, reducing its reliance on wholesale funding which had become more expensive due to credit agency downgrades.

The bulk of the job losses – 670 – will come from the closure of the financial services centres in the south, while 300 jobs are set to go in Yorkshire, on top of 200 that have already been announced. A further 200 will be moved to NAB. Of six back office locations to be closed, four have already been announced – Leeds, London and two in Glasgow.

Andy Willox, Scottish policy convener for the Federation of Small Businesses, expressed concern on the impact of the change on his members. He said: “The Clydesdale bank is a key player in the Scottish small business banking market. Any change to the banking services which Clydesdale Bank provides could have a significant impact on the wider Scottish economy.”