Yorkshire Bank may get capital boost from parent

National Australia Bank won approval to provide the fresh capital for Yorkshire and Clydesdale earlier this month, which a spokesman said was usual business and part of prudent capital management across the group.

Regulators including the Financial Services Authority are forcing banks to hold more and better quality capital to shield depositors against risk of losses from bad loans as economic conditions remain difficult.

Yorkshire and Clydesdale banks reported a 17 per cent rise in pre-tax profits to 81m for the six months to March 31, once bad and doubtful debts of 183m were included. Underlying pre-tax profits were up 11 per cent to 264m.

The banks' Tier 1 ratio improved to 8.8 per cent at the end of March from 8.2 per cent six months earlier after the parent group injected 160m of capital in December.

National Australia Bank, which has over 300 Yorkshire and Clydesdale branches in the UK, last month said it was comfortable with its UK operations and is under no pressure to sell or bulk up, after speculation it would soon choose to either buy more assets or quit.