Advanced options for Clydesdale

National Australia Bank is working towards adopting "advanced" accreditation for working out capital requirements for credit risk in the UK, the Australian Financial Review reports.

At present, NAB follows the standardised approach in the UK, as do all small banks in the market.

In Australia, NAB has accreditation to use the advanced approach, which lowers capital requirements for most purposes relative to the standardised approach.

The AFR reports that NAB's efforts to secure advanced status for its Clydesdale Bank subsidiary from the Financial Services Authority may take two years, which means it may not be of any help in lowering capital costs relative to other bidders for the 600 branches that Lloyds Banking Group is being forced to sell. NAB is assumed to be a credible bidder for this business.

In related news, the BBC reported yesterday that there is talk that Treasury ministers are leaning towards supporting the transfer of Northern Rock (wholly owned by the UK government since its rescue in 2007) to another building society, rather than selling it to a bank.