Thousands of Clydesdale Bank employees in Scotland face uncertainty about their jobs as chief executive David Thorburn declared returns are "unacceptable", with Government austerity measures helping trigger a radical strategic review.
Mr Thorburn blamed the move on "the faltering economic recovery and the changing economics of banking".
Costs at the bank have more than doubled since the financial crisis, he said, as it beefed up capital and liquidity levels and it is spending £25 million a year on regulatory changes.
The results of the review will be revealed in May.
Asked if it could result in job cuts, Mr Thorburn said: "A significant proportion of our cost base is represented by employees.
"You cannot get into a review of this nature without having an impact there. We do not know exactly what and when."
Clydesdale has more than 4200 employees in Scotland and announced 279 job losses before Christmas.
A trading update from the bank showed that it is being hit by the economic slump and falling commercial property prices. Its charge for bad and doubtful debts rose to 1.27% of gross loans and acceptances on an annualised basis in the last three months of 2011 compared to 0.86% for the six months to September.
Higher funding and deposit costs also hit revenues.
Cameron Clyne, chief executive of parent company National Australia Bank, said: "It is clear that the UK economy is likely to experience a much longer period of subdued growth with the ongoing sovereign debt crisis in the eurozone and the continuing austerity programme by the UK Government."
Mr Thorburn said returns at Clydesdale are "unacceptable to me or our shareholders".
"This review is about improving returns in the business and to do that we will need to change the shape of the business," he added. "Nothing is off the table."
However, he implied that if it exits any business areas it will be on the corporate side as he praised the robustness of its retail banking arm. "That business, if you look at the impact of the external environment on it, has stood up very well."
Clydesdale, which includes Yorkshire Bank, has more than 300 branches and 2.7 million customers.
Asked about the future of its commercial property business which, like that of other banks, has seen substantial bad debts since 2008, Mr Thorburn said: "We are looking at the whole enterprise and that includes the commercial property business. The economics of that are challenging and we need to look at that."
It has already cut back on new loans for commercial property.
Mr Thorburn refused to comment on whether the review could see Clydesdale sold by NAB. However, there is a widespread view in the City that even if NAB wanted to exit to focus on more profitable geographies, there is a dearth of potential buyers.
NAB this week pumped another £100m into the Clydesdale pension scheme, which will have the effect of boosting its capital cushion, taking its support to almost £2 billion since the financial crisis hit.
NAB, Australia's fourth-biggest bank by market value, bought Clydesdale in 1987 and Yorkshire Bank three years later.
Meanwhile, Lloyds Banking Group, owner of Bank of Scotland, confirmed that 20 roles will go in Scotland as it announced plans to cut another 1000 jobs UK-wide.
The cuts in Scotland will affect middle-management positions in a number of different teams. A Lloyds spokesman said: "There will be very little impact on Scotland. There will be 20 role reductions but these won't necessarily result in job losses, it could just be that if someone retires or leaves the company, their position will not be filled."
l Spanish bank Santander has revealed that it beat its lending targets agreed as part of the Project Merlin deal with the Government. Santander UK lent £8.7bn, compared to its commitment of £6.7bn. Of this £4.3bn, went to small and medium-sized businesses, against its £4bn target.
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