NATIONAL Australia Bank chief executive Cameron Clyne has ruled out a distressed sale of Clydesdale Bank but cautioned its recovery depends on the UK economy.

Last week NAB recorded a 22% fall in annual net profit to A$4.08 billion (£2.6bn) thanks in large part to Clydesdale which posted a £183 million loss for the 12 months to September 30.

Mr Clyne admitted that shareholders were "rightly not happy with the UK performance".

He told an Australian television channel: "We've very much called out the need to manage for long- term value. Our share- holders do not want to see a distressed exit. But in the interim we've got a very difficult economic environment."

Earlier this year the company announced that Clydesdale would retrench into its heartlands in the north of England and Scotland and that the group would take on billions of pounds worth of troubled commercial property loans.

David Thorburn replaced Lynne Peacock as chief executive last year.

Meanwhile, all but two of the bank's non-executive directors have departed with a number of NAB executives taking board seats.

Mr Clyne said the Glasgow-based bank now had a stronger management team. He also insisted the core Clydesdale business made a profit during the past six months.