Owner blames economy as Clydesdale and Yorkshire banks cut 1,400 jobs

The owner of Clydesdale and Yorkshire banks today blamed the UK's faltering economy for a "brutal" restructuring that will axe more than 1,400 jobs.

National Australia Bank's two UK brands will cut about 17 per cent of their workforce by 2015, as they mainly pull out of the south of England and concentrate on their heartlands in Scotland and the north of England.

The banks, which have 337 branches, will close 29 of their 73 Financial Solution Centres, which offer services to businesses and better-off individual investors, while nine will be merged with local retail branches, following a strategic review. In addition, six back office locations will be shut.

The decision was blamed on a deterioration in the UK economy, which recently slipped back into recession, with commercial property markets particularly badly hit.

The announcement comes as the banks racked up a £25 million loss in the six months to the end of March, compared with a £77 million profit in the previous year, reflecting a higher charge on bad debts and higher funding costs.

The results reveal a £141 million write-down to the value of Clydesdale and an additional £120 million set aside to cover mis-sold payment protection insurance.

But Unite national officer David Fleming said the announcement was "nothing short of brutal" for the UK workforce.

He said: "Unite finds it disgusting that the company decided to release a statement from Australia in the middle of the night so UK staff across Yorkshire and Clydesdale banks would wake up to hear that their jobs are being cut through the morning news reports.

"This is not the behaviour of a responsible or credible organisation."

The bulk of the job losses - 670 - will come from the closure of the financial services centres in the south, 300 jobs are set to go in Yorkshire, 60 in Scotland, on top of 200 that have already been announced. A further 200 will be moved to NAB.

NAB chief executive Cameron Clyne said: "In the last half year there has been a significant downgrade in the growth prospects of the UK economy, in part reflecting the drag on its recovery from heightened weakness in the eurozone.

"In addition, the commercial property market, which had previously seen signs of recovery, has recently experienced a "double dip" as the recovery stalls and other banks accelerate the reduction in their commercial real estate exposures.

"This has contributed to the current downturn in the UK being longer and slower to recover than experienced in the 1930s following the Great Depression, and has led us to take these actions at this time."

He added that the UK retail operations had delivered reasonable returns and grew mortgage lending and deposits despite challenging conditions. But the losses were driven by charges for doubtful debts in its commercial property market.

The restructuring will cost £195 million but will deliver cost savings of £74 million by 2015.

Of the six back office locations to be closed, four have already been announced - in London, Leeds and two in Glasgow.

NAB bought Clydesdale Bank in 1987, followed by Yorkshire Bank in 1990. NAB has been the subject of deal speculation over the last year after it was unsuccessful in the auction of 318 branches put up for sale by Royal Bank of Scotland, a deal later secured by Spanish giant Santander.

The job losses are the latest in the spate of redundancies to have hit the financial sector as it battles against the weak economy and increasing regulation. Last week, HSBC announced 2,200 job cuts in the UK.

Taxpayer-backed Lloyds Banking Group has said it will cut 1,300 jobs and transfer 300 roles to India, while Royal Bank of Scotland is axing 464 posts.

Union Unite has said that since the start of the financial crisis, Lloyds had cut 28,600 workers and RBS around 26,000.

Scottish Finance Secretary John Swinney said: "The Scottish Government welcomes Clydesdale Bank's continued commitment to Scotland, its commitment to make no branch closures and its decision to boost lending to small businesses.

"This Government recognises the importance of a successful banking sector to Scotland's economy and we continue to work with the banks to ensure the sector as a whole is both competitive and sustainable.

"This will be a difficult time for those affected by job losses and we will do everything we can to provide support and help those affected through the finance sector jobs taskforce and our Partnership Action for Continuing Employment.

"We will continue to work with Clydesdale Bank as it seeks to strengthen its position in Scotland and to ensure any job losses are minimised."

PA