Clydesdale Bank faces structural pressures that will keep growth depressed and bad debts relatively high, according to a new report from ratings agency Standard & Poors.

S & P says the transfer last October to parent National Australia Bank of the bank's £5.6 billion commercial ­property portfolio has improved the bank's capital position, but goes on: "Notwithstanding the loan transfer and other measures to de-risk the franchise, we consider that Clydesdale's medium-term earnings capacity will remain constrained by sluggish economic fundamentals in its core markets."

S & P is leaving counterparty credit ratings on the Glasgow-based bank unchanged at BBB+ (long-term) and A-2 (short-term), but removing the ratings from its CreditWatch alert where they were placed on May 31.

The outlook is negative, reflecting the agency's view on the UK banking sector.

The agency says Clydesdale's capital ratio improved from 9.5% to 10.7% last year, but it expects a range of 10% to 10.5% over the next one to two years.

S & P says the bank still has "material exposures in business lending to sectors that have been dispro­portionately affected by the weak macroeconomic ­environment such as ­hospitality, construction, and manufacturing".

Added to the geographic concentration, that would keep the loan impairment charge at a higher level than most UK banks.

It says Clydesdale has "moderately strategic" importance to NAB, but adds: "We could revise downward our view of Clydesdale's strategic importance to NAB if we were to perceive an increased likelihood of a sale over the next 12 months."

NAB's appetite for a sale might be stimulated by "a weaker Australian dollar, an improving earnings trend at Clydesdale, and the emergence of interested buyers of UK bank assets".