National Australia Bank, owner of the Clydesdale and Yorkshire bank brands, is to cut 1,400 jobs in the UK by 2015 as part of a streamlining of operations.
In an announcement to the Australian stock exchange, the bank says it has completed a strategic review of its British assets to adapt to weak economic conditions. As a result, the business will be simplified to focus on retail and small business lending in Scotland and northern England.
Some back offices will close and NAB’s Australian operations will take charge of most of the UK’s commercial real estate exposure of £6.2bn in the first half of 2013. The transferred commercial real estate portfolio will be run off as the assets reach maturity.
Charges related to the outcome of the strategic review are £456m of writedowns and restructuring charges at its UK division, including £120m set aside to cover missold payment protection insurance.
When completed in 2015, the restructure is expected to result in cost savings of around £74m per annum.
It plans to close 29 of the banks’ 73 financial solution centres, which offer services to businesses and higher net-worth individual investors, and merge nine others with local retail branches. The changes would mainly affect operations in the south of England. Six back office locations will also be shut.
The UK unit posted a £25m loss in six months to March 31, compared to a £77m profit the previous year.
Cameron Clyne, group chief executive of National Australia Bank, says: “The strategic review was undertaken because recovery in the region is now considered a longer-term prospect, and recently deterioration in credit quality and an increase in the cost of funding following the downgrades to Clydesdale Bank’s credit rating have combined to reverse the recover in UK banking’s financial performance.”