Yorkshire Bank hit by downgrade warning

Fitch yesterday placed four Australian banks including NAB on rating watch negative (RWN) saying “despite significant improvements, these banks continue to have a weaker funding profile than other similarly rated peers”.

NAB’s long-term debt is currently rated AA by Fitch. It also placed Clydesdale Bank, of which Yorkshire Bank is a trading subsidiary, on negative watch. Clydesdale has an A+ long-term debt rating with Fitch.

Fitch added any downgrades of the Australian banks are likely to be limited to one notch, with AA rated banks at most risk.

Ratings measure the perceived risk of an institution and its debt. Lower debt ratings can lead to higher funding costs.

A Yorkshire Bank spokesman said: “Our long-term rating has not changed and is only under review at this stage.

“We are a conservative bank with sound capital and funding and our parent, NAB, is a highly rated and well capitalised bank which continues to strengthen its funding profile.”

Fitch noted the Australian banks are exposed to many similar trends seen by rivals around the globe, including “an uncertain macroeconomic environment and evolving regulatory regimes”.

In September, Fitch downgraded Clydesdale’s debt rating from AA- to A+, with a “stable outlook”, based on the belief that its strategic importance to NAB may be “diminishing slightly”.

However, earlier this month NAB ploughed another £400m into Yorkshire and Clydesdale banks to bolster their balance sheet.

As a result Clydesdale’s tier one capital ratio – a key measure of financial strength – increased by 1.4 per cent on a pro forma basis.