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Two Banks Set To Axe 1,400 Jobs In UK

(c) Sky News 2012

The Clydesdale and Yorkshire banks are to cut more than 1,400 jobs in the UK, it has been announced.

The confirmation came from the owner of the two banks, the National Australia Bank (NAB).

NAB said the jobs would go by 2015, following a strategic review which was announced in February.

The shedding of jobs at the Clydesdale and Yorkshire banks will shrink the size of its UK operation by around 15%, which has 337 branches and a 8,300-strong workforce.

NAB said it would close 29 Financial Solution Centres in southern England and six back office locations as it moves to focus primarily on Scotland and Northern England.

The review came in response to "the deterioration in the economic and operating conditions" in the UK, particularly in the commercial property market, the Australian owners added.

Clydesdale and Yorkshire banks racked up a £25m loss in the first half of the year, compared with a £77m profit in the previous year, reflecting a higher charge on bad debts and higher funding costs.

Last week it was revealed that the UK economy slipped back into recession during the first three months of 2012, while the eurozone debt crisis is ongoing - with Prime Minister David Cameron warning at the weekend that the single currency bloc is "not even half way through" its difficulties.

NAB chief executive Cameron 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.

"The action we are taking is needed to adapt to this current economic environment in the UK, and to reposition the UK banking business to improve returns for the group over the medium term."

Yorkshire Bank was founded in 1859 in Halifax, West Yorkshire, and has 185 retail branches, while Glasgow-based Clydesdale, which was bought by NAB in 1987, has 152 outlets.

Following a consultation, the UK's workforce will be reduced to around 6,900.

Mr Clyne added: "While every effort will be made to support our people, the substantive repositioning of the business will impact roles in the UK."

NAB has been the subject of deal speculation over the last year after it was unsuccessful in the auction of 318 branches put up for sale by Royal Bank of Scotland (LSE: RBS.L - news) , a deal later secured by Spanish giant Santander (Madrid: SAN.MC - news) .

The latest UK banking job losses come after HSBC (LSE: HSBA.L - news) announced it was cutting 2,217 jobs in Britain by the end of next year.

As NAB revealed the cuts, the influential Ernst & Young ITEM Club warned of a worsening outlook for banking and insurance industries on the back of sluggish economic growth.

The economists said write-offs on corporate loans would increase to 1.9% this year, the highest annual rate since the mid-1990s, up from 1.6% in 2011.

Insolvencies are likely to rise more sharply in the North East of England and Wales, where economic output is set to contract by 0.1% and 0.3% respectively, the group added.