National Australia Bank will curtail lending for commercial property in the UK. The decision, reported by trade media on Friday night, emerged one day after NAB topped up the capital base of its marginally profitable UK business.
Property Week reported that the bank had "close[d] doors to new lending". The bank plans to sell a portfolio of £300 million in commercial property loans.
BBC reported that the bank will "provide support" for existing customers, and quoted a bank spokesman saying talk of a selective sell-down of property loans was speculative.
On Friday, NAB said it had contributed £400 million in capital to Clydesdale Bank. This lifts the capital base of the bank to £1.6 billion.
It also lifts the tier one capital ratio to 11.3 per cent, from 9.9 per cent, as of September 2011.
NAB has had to allocate around £1 billion in new capital to Clydesdale over the last two years. The majority of the earlier payments were needed to top up the defined benefits pension scheme.
Last week's capital injection may be linked to the implied requirements of bank regulators and credit ratings agencies.
In September, the Independent Commission on Banking in September proposed a "ring-fence buffer" for medium-sized banks - such as NAB's Clydesdale Bank - of between one and three per cent of the bank's risk-weighted assets over and above the minimum level of capital of seven per cent proposed by the commission.
Clydesdale Bank, thus, more or less met the effective minimum requirements proposed by the commission already.
In December, Standard & Poor's cited NAB's exposure to the stressed economies of Britain (as well as New Zealand) as factors that may lead to a downgrade in the bank's credit rating. S&P made the comments in connection with a decision to lower the credit rating of NAB to AA- from AA, a downgrade also applied to the ANZ, Commonwealth Bank and Westpac.