MP warns Yorkshire Bank over lending decision

Clive Betts, the Member of Parliament for Sheffield South East, warned that the Australian-owned bank’s activities could deliver “a real blow to Yorkshire’s economy”.

He claimed that the bank has been “tying businesses into loans which are inappropriate... with very high get-out clauses”.

And he said it was “extraordinarily strange” that the bank has withdrawn from commercial property lending “at a time when banks ought to be lending to successful businesses to keep them going”.

Mr Betts added: “That’s what they are being asked to do by Government. I thought that’s what banks are supposed to be there for – to lend money to businesses.”

The Parliamentary Commission resumes its investigation into the banking industry in the new year. It has the power to call in banking executives to give evidence.

Yorkshire and Clydesdale Banks reported a £470m loss in the last financial year, dragged down by bad loans on commercial property. In October, they transferred £5.6bn of commercial property loans to the balance sheet of their parent, National Australia Bank.

NAB tried and failed to sell its UK subsidiaries and is now carrying out a deep restructuring of the business.

Long-standing Yorkshire Bank customers have complained that NAB is contacting them to demand repayment.

A spokesman for Yorkshire Bank said transferred loans continue to be managed in line with previously agreed terms.

He added that the exit from commercial property lending does not mean the bank has stopped lending to growing businesses looking to expand or buy new premises.

“Throughout the year Yorkshire businesses have continued to expand and grow with our support,” he said. “In fact, in November we launched our Growing Business package, which includes a ring-fenced fund of £1bn specifically for businesses that want funding to grow their business.”

In October, Yorkshire and Clydesdale said they had agreed to review the sale of interest rate hedging products. They emphasised that the City watchdog has not made any findings that they acted inappropriately.