Yorkshire Bank cuts hundreds of jobs in region

In a damning indictment of the UK’s faltering economy, National Australia Bank (NAB) said contagion from the eurozone crisis is slowing recovery and forcing it to shrink its business. It announced plans to cut 1,400 jobs.

About 300 jobs in Yorkshire will go by 2015 as Yorkshire and its sister bank Clydesdale shed one in six of their 8,600-strong workforce.

The job losses and the bank’s stark appraisal of Britain’s economy will pile more pressure on the Government after official figures last week confirmed the UK had plunged back into recession.

NAB chief executive Cameron Clyne blamed the cuts on Britain’s economy being “longer and slower to recover than experienced in the 1930s”.

Unions branded the cuts “brutal”, as NAB revealed plans to increase dividends to shareholders.

The bulk of the job losses will be in the South. The bank is closing 29 business banking centres, as it retrenches to its heartland in the North of England and Scotland.

Yorkshire Bank will merge its Leeds back office operations into one site at Merrion Way, closing its Brunswick Point office.

About half of the bank’s 2,000 Yorkshire staff are based at the sites, which are responsible for tasks including risk, fraud and collections. In total, it is closing six back office sites.

However, it will retain its 337-strong branch network, and 44 business banking centres will survive. Business banking centres in Bradford, Doncaster and Hull will close and merge with branches.

The bank also ruled out an imminent sale or big acquisition, telling investors restructuring was the “only current option”.

Mr Clyne said: “In the last half year there has been a significant downgrade in the growth prospects of the UK economy, in part reflecting the drag on its recovery from heightened weakness in the eurozone. In addition, the commercial property market, which had previously seen signs of recovery, has recently experienced a ‘double-dip’ as the recovery stalls and other banks accelerate the reduction in their commercial real estate exposures. This has contributed to the current downturn in the UK being longer and slower to recover than experienced in the 1930s following the Great Depression, and has led us to take these actions at this time.”

Unite national officer David Fleming said the announcement was “nothing short of brutal”.

He said: “Unite finds it disgusting that the company decided to release a statement from Australia in the middle of the night so UK staff across Yorkshire and Clydesdale banks would wake up to hear that their jobs are being cut through the morning news reports.”

HSBC last week announced 3,000 job cuts in the UK but the cuts follow significant downsizing in the region and the loss of thousands of jobs principally among staff at the giant Lloyds banking group which took over HBOS.

Yesterday Yorkshire Bank CEO David Thorburn said the cuts were vital to improve returns.

“The economy has not recovered as we had hoped,” he said. “There comes a time when you have to draw a line. It’s just a necessary response to a very difficult environment.”

Yorkshire Bank said it fell to a £25m loss in the six months to the end of March. Charges for bad debts surged by £131m to £282m.

The bank will cease commercial property lending, with its Australian parent taking control of a £6.2bn book of problematic loans for office blocks, warehouses and housing developments.

Comment: Page 10; Retreat from South: Business Tuesday, Page 1.