CLYDESDALE Bank could fall to a loss this year due to the impact of recession, a heavyweight banking analyst has warned, adding the bank is a "millstone" around the neck of parent National Australia Bank.

NAB and Clydesdale, which includes Yorkshire Bank, will publish trading updates today which will show how they are standing up to tough markets.

Clydesdale announced a 45% increase in pre-tax cash earnings to £237 million in the year to September 30, although once exceptional items are added back in this equated to pre-tax profit of £21m, down from £49m the previous year.

Citigroup's Craig Williams indicated the Glasgow-based bank could struggle to stay in the black as the economy falters.

"A recession in Europe increases the risk of rising credit costs and the prospect of losses in 2012," he wrote in an investors note.

New Clydesdale chief executive David Thorburn has already announced a savings drive, including job cuts, in the face of weak lending demand.

NAB has pumped in £1.7 billion, including a £400m payment in January, to bolster Clydesdale's capital cushion since the credit crunch hit, to meet regulatory demands and to protect it from future loan losses. NAB has also put £130m into the staff pension scheme and demanded that members make larger contributions.

Mr Williams suggested NAB could be preparing to sell Clydesdale.

"At best these announcements give investors hope for a looming exit from the business. We sense the market would gleefully accept a return of capital."

He added: "At worst, these announcements serve to remind investors of the 'millstone around the bank's neck' that the UK business represents."

He said that even after the contribution to the Clydesdale scheme, "the residual deficit will likely remain at a material level".

NAB has repeatedly insisted its focus in the UK is organic growth at the Clydesdale although it has said it would consider "all potential options".

Clydesdale has more than 4200 staff in Scotland.

A Clydesdale Bank spokesman said: "We don't comment on market speculation."