Job losses help to steer Clydesdale back to profit

Clydesdale Bank chief executive David Thorburn yesterday said he would not let speculation about the lender’s future distract him from an ongoing restructuring that helped deliver a return to profit for the first half.

Picture: TSPL

The shake-up, which will see 1,400 roles axed by September 2015, has been accompanied by more rumours that National Australia Bank (NAB) was seeking to offload its UK arm, but Thorburn insisted that Clydesdale’s parent company has been “very supportive”.

He said: “I never comment on speculation because I don’t want to fuel the fires. All of my focus is on the outcome of the strategic review and the transformation of our business.”

Clydesdale, which also owns Yorkshire Bank, delivered a pre-tax profit of £54 million for the six months to March, compared with a £38m loss a year earlier.

The turnaround was mainly driven by the transfer of a £5 billion commercial real estate loan book to NAB for run-off.

Overall, NAB posted a 3.1 per cent increase in first-half profits to A$2.9bn (£1.9bn), and group chief executive Cameron Clyne said: “The UK strategic review is proceeding ahead of plan. The UK banking business is managing a smaller and stronger balance sheet following the transfer of the vast majority of its commercial real estate portfolio.”

As well as cutting jobs, the Glasgow-based bank has closed down 29 business banking centres and relocated nine others.

Thorburn said progress in the restructuring was “quite a bit ahead” of its expectations, although he noted there was more to be done against the challenging economic backdrop.

“I don’t want to give the impression that it’s all over bar the shouting, but the good thing about getting this more difficult work done is that it allows us to focus on where we want to take the business,” he said.

The bank plans to launch a mobile banking service in August, with contactless cards following close behind, and will also be embarking on a marketing push this year as part of a relaunch of its brand.

Mortgage lending at the bank grew by £1.3bn, or 9.1 per cent, during the first half, compared with growth of just 1.5 per cent across the wider market. However, business lending was down by £7.4bn on last year, mainly because of the commercial property loan book transfer and a fall in lending to small firms.

Thorburn insisted that Clydesdale had an “appetite for new business” but – echoing recent comments from Royal Bank of Scotland chief Stephen Hester – said small companies were not clamouring for loans.

Clydesdale has signed up to the Bank of England’s Funding for Lending scheme, although it is yet to tap into the facility, which offers cheap funds to banks and building societies, on condition that they pass on the benefits to households and businesses.