Clydesdale and Yorkshire Banks announced on Friday night that they would be halting commercial property lending, but that existing customers would continue to receive support.
The banking group made the decision to halt lending to new customers due to a ‘reduced appetite’ for new non-residential property lending, and stressed that residential letting would not be affected in any way by the proposed lending cuts.
In a public statement, a spokesperson for the bank said: “While our new lending to businesses increased by over £7 billion in the past two years, we have been clear for some time about our reduced appetite for new commercial property lending and have sensibly introduced tighter controls in this area.”
“Many commercial property businesses have elected not to extend their borrowing during the protracted economic uncertainty. We continue to provide support for existing customers.”
A spokesman also addressed rumours regarding the bank’s £300 million legacy loan portfolio. Some news agencies have reported that the portfolio will be sold on to other agencies; however, the spokesman called these stories “speculative.”
The news came a day after parent company, the National Australia Bank (NAB), topped up the capital of Clydesdale Bank by £400 million from its own capital reserves. This was to ensure the bank could draw upon boosted reserves in the case of further economic downturns in the UK, as bank regulators look towards higher levels of capital.
However, this injection of capital could have a negative effect on National Australia Bank that far outweighs the decrease in its own capital. In December, Standard and Poor’s claimed that NAB’s exposure to struggling economies such as Britain and New Zealand was a factor in the banking group’s credit rating being downgraded. The comment was made in connection with a decision to lower the bank’s credit rating to AA- from AA, a change which also applied to the ANZ, Commonwealth Bank and Westpac.
