NATIONAL Australia Bank has ploughed another £400m into Yorkshire Bank as credit conditions deteriorate in the UK.
Yorkshire, which trades in the UK as part of Clydesdale Bank, said the capital transfer will strengthen its balance sheet.
In a brief statement, Yorkshire Bank chief executive David Thorburn said: “This capital increase continues our focus on maintaining a conservative level of liquidity and strong capital ratios.”
The lender said its tier one capital ratio – a key measure of financial strength – will increase by 1.4 per cent on a pro forma basis. Yorkshire did not say what level it will increase to, but it had a tier one capital ratio of 9.8 per cent at the end of September, suggesting a new ratio of around 11 per cent.
NAB has repeatedly bolstered its UK division’s balance sheet during the credit crunch and downturn through share and debt issues. It ploughed £700m into the bank in late 2008; £310m in its 2009/2010 financial year; £200m in December 2010; and £100m in July 2011.
A recent report by the Bank of England on credit conditions in the final three months of 2011 warned of a looming credit squeeze. “Although lenders expected a small increase in overall credit availability in the coming three months, factors such as the economic outlook and tighter wholesale funding conditions were expected to impact negatively on credit availability,” warned the BoE.
Yorkshire and Clydesdale last year posted underlying profits up four per cent to £533m in the year to the end of September. At the time Mr Thorburn said “the story of 2012 (for the bank) is going to be the story of the external environment”.
The lender was also hit with downgrades by ratings agencies last year, which increased its cost of raising capital.
Yorkshire Bank declined to comment beyond the statement.