NAB to consolidate UK head office functions in Glasgow Clydesdale brand will see another 18 branches open in England

The Australian bank recently ditched the UK banking licence for its other British subsidiary, Yorkshire Bank, in favour of operating under the Clydesdale licence.

A spokesman for NAB said this was because the Clydesdale licence allows it to print bank notes. He added: "So we make a bit of money out of making money."

Until recently, NAB operated the two brands almost independently of each other, each supported by their own infrastructure.

There were increasing signs that NAB was moving towards a more integrated structure for its UK operations when in October last year, David Thorburn, chief operating officer of Clydesdale since April 2002, added that same position for Yorkshire to his expanding portfolio.

Asked whether the new NAB strategy for the UK included further consolidation of head office functions in Glasgow, rather than in Leeds, where Yorkshire is based, the spokesman said: "To an extent they already have. David Thorburn is chief operating officer of both banks . . . so yeah, head office functions will be consolidated in Glasgow."

Pressed on why executive functions for the UK operations are moving north, he replied:

"That's where the people are, to a large extent."

However, he denied the bulk of any job cuts that ensue from the restructuring will be focused on Yorkshire's Leeds base.

"Leeds is where our risk and marketing teams are. There really were only a few roles supporting the chief operating officer in Leeds, and they are now gone."

The operations of the two banks comprise 460 branches, 50 business banking centres, 4217 retail staff and 2.7 million customers.

The combined brands represent just 4per cent of the UK retail banking market.

Stewart defended his recent decision to sell NAB's two Irish banks, saying the simultaneous revival of four banks' franchises would have been a highrisk strategy. By focusing on the mainland UK over the smaller Irish market, "the prize was potentially huge", Stewart added.

Despite the main executive functions migrating to Glasgow, the NAB spokesman stressed the bank was "absolutely committed to operating both brands".

He added: "Yorkshire is one of the strongest brands in its own market, as is the Clydesdale."

A major plank in the new strategy is to target growth in the populous south-east England market.

Clydesdale already has 12 integrated financial service centres there, aimed at well-off individuals with annual salaries of about [pounds]60,000 or more and small and medium-sized companies with sales of about [pounds]1m or more.

However, the Scottish bank will open a further 18 centres, or branches, in the region before the end of the year.

It also intends to convert 39 Clydesdale and Yorkshire branches in the English midlands and north of England into the financial service centres by the end of the year.

To support an increased marketing push, NAB will simplify its product range by slashing the number of products that Clydesdale and Yorkshire offer from 400 to about 150 within two years.

However, Stewart warned the UK restructuring plan would come at a price. He said UK earnings would again fall in the current financial year, from [pounds]190m last year.

This will be caused by a drop in margins, cost growth and investment expenses.

The Melbourne-based bank expects Clydesdale and Yorkshire to start delivering sustainable profit growth by May 2007.

Stewart added: "By that time not only would we have turned it around, we believe, the growth that we can show is actually sustainable."

The NAB chief also expressed interest in a UK acquisition, if it helped speed up the recovery process.

"But we don't get up in the morning looking for acquisitions the way the bank used to, " he said.