CLYDESDALE Bank was given a robust vote of confidence by parent National Australia Bank yesterday as its new group chief executive said the UK management team was doing "an exemplary job".
Cameron Clyne, who launched a strategic review of NAB when he took over from Scots-born John Stewart as chief executive in January, quashed speculation that a divestment of the British operations was on the cards amid global banking turmoil. NAB also
owns Yorkshire Bank.
Clyne said in a statement to the Australian stock exchange: "It is absolutely not in the interest of shareholders to exit our UK position.
"We are committing to supporting this business and preserving our future options through the UK recovery. The UK business is a scarce and valuable mid-sized player."
Clyne praised the "exemplary job" being done by NAB's UK management team, which is led by chief executive Lynne Peacock.
He said the Clydesdale and Yorkshire banks had strengthened their funding mix, with good growth in customer deposits, despite "very tough market conditions".
Clyne added: "The reality is that our position is proving to be resilient and our UK assets are performing better than peers on many measures.
"Over the last few years a good (UK] business has been created, but it is now operating in a very difficult market, which will take some time to work through."
NAB's UK operation posted pre-tax profits of £343 million in the year to the end of September 2008 – just £1m down on the previous year as many UK peers slumped to major losses. At the time, Peacock credited the group's safe and simple business model for the performance.
Yesterday Peacock said Clydesdale's strategy remained unchanged, and the bank would continue to drive further efficiencies. She said: "This strategy has helped us transform a poor bank in good conditions into a good bank in poor conditions and our conservative and prudent banking model continues to favourably differentiate us from our peers."
The vote of faith in the UK operations came as NAB revealed it would cut its first-half dividend by 25 per cent, against a backcloth of rising bad debts and higher funding costs.
Christopher Hall, banking analyst at Argo Investments in Sydney, said of the strategy update: "There were no shocks.There was nothing to suggest things were worse than expected. That came as a relief today."
