ITS reputation has weathered the global banking crisis which saw its two big Scottish competitors teeter on the brink.

But Clydesdale Bank's safe and rather staid image is now of little comfort to staff, who this weekend are looking at an uncertain future.

Owner National Australia Bank last week blamed the precarious British economy for its decision to "review" its UK arm, which Clydesdale has been part of since 1987. NAB chief executive Cameron Clyne, 43, said the results of a strategic review would be unveiled no later than NAB's interim results announcement on May 10.

Despite Clyne's rhetoric of recession, Clydesdale has managed to maintain top-line profitability since the financial crisis struck, making pre-tax profits of £237 million in the year to September 30, 2011.

It is, however, facing problems – many of them described by banking industry experts as self-inflicted.

One told the Sunday Herald: "NAB has massively under-invested in its UK businesses for years. They have inadequate financial reporting systems, they have a lacklustre to disappointing commercial property portfolio, and they have higher capital costs than other banks."

The bank is said by some analysts to have "legacy issues" after making an ill-timed entry into the UK's commercial property market in 2004-05. Former insiders have claimed that Clydesdale made ill-advised loans to fund speculative developments in Scotland's central belt and the north of England at the worst time in the economic cycle in 2005-07. They say this has weighed on the balance sheet, as many of these loans are unlikely to be repaid in full. Many of the loans were advanced by the group's semi-autonomous Financial Solutions Centres, which were introduced in a blaze of publicity in 2005.

One former Clydesdale Bank commercial property insider said: "Some crazy stuff was going on, like financing a block of flats in central Glasgow at 105% loan-to-value. Some of the guys in Yorkshire Bank just went daft for property. One lent £15m to build a 20-storey block of flats in Manchester, but the developer ran out of money after building just four floors. That was held up internally as an example of what not to do.

"In Clydesdale Bank it was not unknown for people to lend seven-figure sums without any credit application and with no security instructed."

Inadequate systems seem to have been partially to blame – the insider said the bank discovered that 90% of its non-retail lending was to commercial property in March 2010, after properly computerising its systems. Before that, individual bankers had recorded their lending activities on spreadsheets.

The source added: "To clean up the mess they're tightening the screws on borrowers, hiking up the arrangement fees, causing some real pain, and they'll also be trying to get the dodgiest loans off their books. If they hadn't had NAB to bail them out over the past four years, they'd probably be bust by now."

Last week, Clydesdale chief executive David Thorburn conceded that the economics of the bank's commercial property business were "challenging". Last month it stopped issuing new commercial property loans.

Clydesdale's plight has been worsened as a result of NAB's inability to expand its UK presence through acquisitions, say analysts. They claim that when Royal Bank of Scotland and Lloyds branches were put up for sale at the insistence of the European Union, NAB was not considered a serious contender.

Owning Clydesdale has become expensive for NAB. One analyst said the bank is now required by regulator the Financial Services Authority to set aside about £800m loss-absorbing capital – proportionately far more than larger banks – as a result of fears that the legacy loan portfolio has turned sour.

Overall NAB has been forced to transfer £2 billion of capital into Clydesdale in the past couple of years – £530m last month alone. The analyst told the Sunday Herald: "From NAB's perspective, Clydesdale appears to have been costing more money than it has been making."

Clyne's predecessor, John Stewart, sold NAB's two Irish banks – National Irish Bank and Northern Bank – for £967m to Denmark's Danske in December 2004, three years before the crisis struck. This followed a scandalous episode for the Melbourne-based group when "rogue trader" John Rusnak was found to have covered up losses of Australian A$360m (about £244m) following disastrous currency bets. Many investors now perhaps wish NAB had sold Clydesdale and Yorkshire Bank, which it bought in 1990, at the same time.

Thorburn declared that "tough decisions" would have to be taken over Clydesdale, but said he was confident "we will emerge from the strategic review in a strong position and very well placed to challenge the bigger banks in the UK".

He conceded that current returns are "unacceptable" – and also acknowledged the review will lead to job cuts, saying: "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."

Unite national officer David Fleming said: "This came out of the blue. Unite have grave concerns about the scale and the commitment of NAB in the UK." The union said it is holding urgent talks with Thorburn and his management team about the implications for staff.

A Clydesdale spokesman said the review is unlikely to be purely about cost-cutting, saying: "We're growing certain areas too, including direct, online and telephone banking."

So it seems that, having failed to expand through acquisitions, it hopes to extend its reach through other means. The spokesman said the aim is to ensure Clydesdale is "a more self-sufficient bank".

The bank is seen as far more likely to wind down its corporate and commercial businesses. Thorburn said despite the troubles over mispriced mortgages last year, the retail banking arm is robust.

Banking industry insiders say if Clydesdale is now sold, it is unlikely to fetch anywhere near the A$2.5bn being targeted by NAB, given the economic climate and state of its balance sheet. However, last October Clyne said NAB would not have a "fire sale" of its UK banks.

Possible bidders include NBNK Investments, a shell company which counts Lord McFall, Lord Forsyth and Lord Levene among its directors.

Other potential interested parties include One Savings, backed by US private equity firm JC Flowers and Hugh Osmond's Sun Capital Partners.

John Morrison, a director of Luxembourg-based financial consultancy Asymptotix, said: "All Clyne is doing is shouting louder to the world, 'This bank is on the block'.

"The loudness probably indicates that NAB would consider a Hoare Govett-type deal – give the business away for one pound, as long as the buyer pledges to honour the debts. I suspect they have completed the drill-through of their loan book and they're looking at a scary mess."