Clydesdale chief says bank survived credit crunch 'because of its conservatism'

A "traditional and conservative" approach ensured the survival of the Clydesdale Bank while its rivals were saved by state bailouts, MSPs heard today.

Clydesdale chief operating officer David Thorburn told MSPs that it avoided the "aggressive" lending which saw Royal Bank of Scotland, HBOS and Northern Rock fall into trouble as the economic crisis intensified last year.

Mr Thorburn was appearing before Holyrood's Economy Committee today in the latest stage of its inquiry into the future of the banking sector in Scotland.

He said: "The Clydesdale is a very traditional, conservative banking operation. It hasn't ever really strayed away from its roots."

Many of the banks which were bailed out had been involved in "aggressive" lending practices and products such as self-certified mortgages.

"Clydesdale bank has not participated in any of those markets at all."

The bank also took a more conservative approach to the make-up of its balance sheet and the way it funded "liquidity".

Mr Thorburn said: "The largest part of our funding was deposits from customers and we had a smaller proportion of funding from money markets than many organisations appeared to.

"A year past in October when the money markets froze, we had a smaller proportion of short-term wholesale funding and a very large proportion of medium and long term wholesale funding, particularly of retail deposits.

"That gives your business a lot of resilience. You can hang in there for a much longer period of time than those that were at the other end of the spectrum."

Mr Thorburn said only a small amount of reorganisation had taken place at the bank, which is owned by the National Australia Bank, since the worldwide crisis.

In the past year, 450 workers have lost their jobs at Clydesdale, 75 of them in Scotland.

Mr Thorburn said the Australian parent company had supported the bank through tougher times.

"The culture of the Australian bank has been prudent, cautious and conservative in the approach to how they run the organisation. It made them more resilient in the crisis.

"Our parent company has been very supportive through the last 12 to 24 months, we haven't had to rely on it overly much."

The Clydesdale has about 12% of the current account market in Scotland, supplies about 4% of all mortgages and about 20% of business banking.

Mr Thorburn told MSPs that business lending was up by 10% by the end of September.

And specialists have been recruited to deal with customers in financial difficulty, one of the changes made in high street branches since the recession.