CLYDESDALE Bank is enjoying an improved financial performance as bad debt levels decline and job numbers continue to fall, its parent National Australia Bank (NAB) has reported.
Meanwhile, Clydesdale's pension fund has sold the bank's Glasgow headquarters to a London-based investor although the group will continue to occupy the building on St Vincent Place.
Clydesdale is retrenching into its heartlands in Scotland and the north of England, where it operates Yorkshire Bank, after being hit hard by the collapse of the commercial property market.
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Around 500 jobs have gone at NAB globally, it reported in an update for the first quarter of its financial year, most of them in the UK. Clydesdale had previously indicated around 1000 jobs would go by March this year including the 468 posts it shed during the 12 months to September.
It plans to cut a total of 1400 jobs by 2015.
Clydesdale chief executive David Thorburn said: "Good progress has been made in the relatively short period since the outcomes of our strategic review were announced in April.
"The restructuring continues to gather momentum and, while there is still much more to be done, our clear focus remains on further strengthening the business through a simplified business model built on our traditional strengths."
NAB, which has been held back by the poor performance of its UK business, posted a cash profit of A$1.45 billion (£952 million) which was in line with market expectations and compared with A$1.4bn a year ago.
"NAB delivered a stronger result for the quarter reflecting the underlying strength of our core Australian business and improved earnings in the UK," NAB chief executive Cameron Clyne said. "This is a pleasing result, especially given operating conditions remain challenging both in Australia and the UK, notwithstanding recent improvements in financial markets."
Mr Clyne, who became chairman of Clydesdale in the summer as NAB asserted more control over its UK operation, said progress in the UK had been "pleasing".
As part of its revamp In October, Clydesdale transferred a £5.6bn commercial property portfolio onto the books of NAB.
This has since been run down by £300m NAB said. It is valued at £4.8bn net of provisions for bad debts.
"Restructuring in the core UK banking business is proceeding well with lower costs, an improved funding mix and closure of all 38 targeted Financial Solutions Centres," Mr Clyne said.
The bank said that UK cash earnings, which exclude one-off items, had improved largely due to falling bad debts. Operating expenses were also lower. While lending volumes were broadly stable, mortgage lending grew to offset lower business lending.
The news signals an improvement since Clydesdale reported a pre-tax loss of £183m for the year to September and saw bad debts rise by almost 90% to £631m.
NAB remained silent on the possible sale of Clydesdale.
Last month there were reports that Spanish bank Santander was considering a £2bn bid for Clydesdale. Santander denied it was in talks with NAB.
Clydesdale had been a potential target of now-defunct start-up bank NBNK. Stan Shamu, market strategist at IG Markets, said signs that NAB's problem areas were improving had boosted its shares, which closed up 1.9% at $A28.63.
Meanwhile Clydesdale Bank has a new landlord at its Glasgow headquarters after its pension fund trustees sold 30-40 St Vincent Place to London-based real estate investor Allied Commercial Exporters for £8.8m.
Clydesdale said it would continue refurbishment of the building. A spokesman said: "We are pleased the long-term commitment we have made to our historic head office building has helped the pension trustees achieve a commercial freehold sale. While we have a new landlord, nothing else has changed."