Clydesdale owner National Australia Bank has admitted it faces continuing turmoil over mis-selling claims, as the group revealed another increase in compensation provisions for its UK arm.
The banking group said UK cash earnings were “broadly stable” during the three months to the end of June, but warned of a “wide range of uncertain factors” when it comes to assessing the scale of future payouts for past misdemeanours.
And it claimed some success in reducing the burden of its overvalued UK commercial real estate portfolio, in the face of pressure from small business owners who say they have been squeezed by its attempts to reduce bad debts.
“High income and lower charges for bad and doubtful debts were offset by an increase in expenses largely related to further provisions raised for conduct and redress matters,” NAB said in its statement to the Australian Stock Exchange.
“Consistent with past disclosures, there remain a wide range of uncertain factors that are relevant to determining losses incurred in relation to these conduct and redress matters.”
The bank also said progress in the restructure of its UK business which included some 1,400 job cuts as Clydesdale and Yorkshire sought to refocus on their respective heartlands in Scotland and northern England had been “pleasing”.
“NAB has produced a solid third quarter result reflecting strong momentum in personal banking and lower loan normal losses in our UK businesses,” said NAB chief executive Cameron Clyne.
“In the UK, we continue to deliver against the strategy we outlined in April 2012. Progress on simplification of our UK banking business has been pleasing, with efficiency benefits ahead of plan.
“We have also achieved further run-off in the UK commercial real estate portfolio with the current balance of £4.4bn down £1.2bn since its transfer to National Australia Bank Limited in October 2012.”
Clydesdale’s reduction in exposure to commerical property, designed to rebalance the books following the 2008 economic collapse, is likely to be felt by property investors already under pressure over the declining value of their assets.
The bank has also come under fire over complex fixed-rate loans with disproportionately high breakage fees allegedly mis-sold to small business customers, with an active pressure group calling for regulatory review.
Earlier this year, business secretary Vince Cable pledged to take up the so-called tailored business loans, which the NAB Support Group claims feature embedded interest rate swaps and punitive breakage costs, and others like them, with the FinancialConduct Authority.
However, it has so far resisted calls to widen the terms of an existing probe into mis-selling.
Clydesdale has insisted that it complies with the terms of that review, but would re-examine individual cases through its existing customer complaints procedure.
In June, a major report by the Parliamentary Commission on banking standards called for the UK Government to ensure regulators had the power to tackle what it called “egregious mis-selling”.