The parlous history of NAB’s Clydesdale Bank

Clydesdale bank sign

The National Australia Bank previously owned a subsidiary in Britain: the Clydesdale and Yorkshire Bank (Clydesdale). When Andrew Thorburn became NAB CEO in August 2014, he soon announced an intended divestment of Clydesdale. The NAB finally sold off Clydesdale in early 2016, with a “de-merging” to NAB shareholders and a partial listing.

In non-existent to spotty coverage in the Australian press over many years (usually in reporting of the NAB’s financial results), Clydesdale has been nominated as a headache for head office. But the reasons have rarely been pursued and never in depth. Post 2007, the troubles have crudely been attributed, echoing bank spokespersons, to the “difficult market environment” prevailing in Britain brought on by the global financial crisis (GFC).

The tenor of the commentary has been to emphasise the dangers of Clydesdale’s parlous operations for the NAB group’s profits, shareholder returns and share price. The victims – customers and bank staff – have remained in a shadow.

Ongoing neglect of Clydesdale by the Australian press proved impossible in the wake of the publication of a report by the Treasury Committee of the House of Commons on 10 March 2015 – ‘Conduct and Competition Lending in SME Lending’ –which received widespread attention in the British media.

The report broadly focussed on the difficulties of the SME (small to medium enterprise) sector (including farming) acquiring suitable finance facilities — a long term dilemma. But it also devoted attention to a particularly pernicious form of SME facilities involving extant complex loan facilities. It was the latter dimension, and its adverse aftermath of destitute and foreclosed businesses and farms, that provided the initial motivation for the Committee inquiry to be set up.

The NAB comes in for specific criticism as a bank that engaged in unethical practices over an extended period, and which had consistently denied justice to its victims with tightly controlled investigations and paltry compensation offers.

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