'Toxic assets' force Clydesdale to withdraw from commercial market

'Toxic assets' force Clydesdale to withdraw from commercial market


A bank which funds a number of bridging lenders has withdrawn funding for the renovation of a listed building, reported The Herald.

Clydesdale Bank, which provides funding lines to bridging lenders Cheval, Masthaven and previously Tiuta, has prematurely called in a loan it lent to fund the renovation of Dallars House in Hurlford, Scotland, after it was inherited by Iain Richards and his brother.

The retraction of lending came after Clydesdale’s parent company, National Australia Bank (NAB) Group, took control of Clydesdales’s commercial real estate portfolio when elements of “toxic assets” forced the firm to restructure its balance sheet, the title reported.

The brothers were initially helped by Clydesdale, their family bank, to fund a £250,000 renovation and flat conversion project for the upper floors of the listed property, which was backed by Historic Scotland.

The bank agreed to lend a further £115,000 in July 2011 to facilitate further rennovation, indicating that a one-year development loan would automatically convert into a ten-year, fixed term debt in August 2012.

A year later however, the bank informed Mr Richards that it would call in the loan after a three-month emergency extension on the facility, which is due to expire this week.

Clydesdale has also asked for Dallars House, which is valued at £700,000, to be formally valued to establish it as sufficient security for the £115,000 loan.

According to The Herald, Clydesdale also re-categorised the loan as commercial upon requesting that Mr Richards change his personal account to a business account and then claimed he had “no history” with the account. 

Speaking about the recalled development loan, Mr Richards said: "Last week, over the course of several phone calls, they have finally told me the best we will get is six months. The explanation I have been given is that NAB Group is restructuring its balance sheet because of elements of 'toxic assets' within its commercial property portfolio.” 

He continued: "I appreciate that I am just a minnow in this ocean of financial chaos, but this uncertainty and shifting of goal posts is causing me great stress.

"I have banked with the Clydesdale Bank for more than 36 years and, for the whole period of loans relating to Dallars House since 1996, not one payment has been missed or late.

"If I had been aware in June last year of the fragility of both the NAB Group and Clydesdale Bank we would not have asked them for these funds. My brother and I have fulfilled our side of the bargain but have been badly let down by the Clydesdale Bank. What use is a bank that refuses to lend money?" Mr Richards added.

A spokesman for Clydesdale Bank said: "We never guarantee future lending as these decisions are dependent on the circumstances at the time of application. Our withdrawal from the commercial real estate market was a strategic decision, not a reflection on particular customer relationships."

The title also reported that the bank said the restructuring would only affect "commercial real estate customers, not people who happen to have a property they use for their business".



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    Mark Parsons

    To the brothers, change your bank and stuff Clydesdale Bank,they will be the losers in the end.

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