Clydesdale's Moody blues
Don't panic, we're told, about the questions being asked of Clydesdale Bank's credit health.
The way they see it in the Glasgow headquarters is that Moody's, one of the big three in corporate credit rating, is merely running a rule over what have been very robust ratings in the first place.
Clydesdale took a hit in earlier stages of the downturn, as its loan book suffered the same pounding as other lenders.
But the story it had to tell was one of relative conservatism paying off, while its larger Scottish-based rivals, the Royal Bank and HBOS, followed by the Dunfermline Building Society, smacked into calamity and needed bailing out on a spectacular scale.
Clydesdale recently reported an uptick in bad debt, but nothing to knock it off its cautious stride.
Now, it seems Clydesdale and its partner Yorkshire Bank are being drawn into a wider Moody's review of Australian banking - these two brands representing the entire European division of National Australia Bank.
Reality check
The Aussie bank sector, and the nation's wider economy, have been noted for having a good downturn - surviving it through a combination of conservative balance sheets and the country's rich commodity mining sector.
Feeding into the Asian manufacturing and construction sectors, the Australian economy didn't even have a recession involving consecutive quarters of contraction.
So peppered with A credit ratings from Standard and Poor, Fitch and Moody's, the downgrade warning may be more of a reality check on ratings generosity.
If they're not chastened by their role in the bank crash, then the agencies should be - and some think they're expressing it by being unduly hawkish.
One thing for sure - this shouldn't affect customers.
But it is one of those periodic reminders that the relatively sluggish Clydesdale and Yorkshire may not fit forever into the NAB view of the future from Melbourne.
Acquisitive rivals keep wondering when they might come on the market.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ´óÏó´«Ã½ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 18th Feb 2011, E_Magnus wrote:Hello Douglas,
As an Aussie with shareholdings across the Big Four bank I can attest to the accuracy of your comments on that nation's banking sector.
However, I was disappointed at the lack of opportunity to comment on your previous article regarding Celtic's results.
Perhaps you could round out the picture for us offshore readers by giving your critique on the finances of the other half of the fondly named "Old Firm". We'll accept the last published results as a starter.
Your take on Rangers money matters, viewed from a Scottish perspective, would be a unique commentary would it not? Or have I missed something in the archives of your Ledger?
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Comment number 2.
At 18th Feb 2011, redrobb wrote:Crikey, I was going to get an R85 form to transfer kids savings from RBS to Clydesdale........probably better to put it on a rank out-sider running at the 3.30 at mussleburgh....................
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Comment number 3.
At 18th Feb 2011, handclapping wrote:So "conservatism paying off" versus "relatively sluggish"; tell us, Douglas, are you in favour of the former, what used to be known as conservative Scottish banking practices or the latter, where spivs gamble our savings in the certain knowledge that we the people will bail them out when they loose them all, and keep paying their bonuses?
Perhaps on the other hand this is the current line of ´óÏó´«Ã½ impartiality, ie don't answer the question, just ask it.
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Comment number 4.
At 18th Feb 2011, BobRocket wrote:'Don't panic, we're told'
'One thing for sure - this shouldn't affect customers'
'this shouldn't affect customers', so it might then ?
A possible downgrade might cause an unfounded run which may mean that a queue starts to form and the website starts to crash....
I'm glad I haven't got any money in the Clydesdale or I might start to worry about it, hang on though, a run on the Clydesdale would probably start a run on all the banks.
I'm glad I haven't got any money full stop, it's just not safe anywhere.
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Comment number 5.
At 18th Feb 2011, Robert Carnegie wrote:I seem to remember hearing of Australia recently being mainly on fire and then flooded, should I worry?
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Comment number 6.
At 18th Feb 2011, E_Magnus wrote:Robert Carnegie: You have the emphasis wrong. Australia was "mainly" flooded (well two states were) and then one state "partly" on fire.
The government is close to instituting a levy on taxpayers to raise nearly $2bn to offset the $6bn cost of restoring infrastructure. All this to the disgust of the opposition who point to Oz's extremely low debt ratio.
The tradesmen love the stimulus, so - No Worries!
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