National Australia Bank will close the accounts of all Clydesdale Bank commercial property borrowers whose loans have been transferred to NAB, the bank has confirmed.
The Herald reported last week that customers with flawless payment records were being told their loans must be repaid immediately on maturity, with one borrower told his £1.8 million facility must be repaid in full the day after his fixed-term agreements expire.
In May the Clydesdale announced the transfer of its commercial real estate portfolio to NAB in Melbourne as part of its restructuring, and said that would mean the "transfer and subsequent run-off of commercial real estate assets".
But it is only in the past week that customers have been told they are part of the transfer, and that their facilities will be withdrawn as soon as they expire.
A Clydesdale spokesman said: "What we have said very clearly about the transfer of the CRE portfolio is that it is being run off.
"We were quite clear it would do so on maturity, depending on customers' ability to pay."
He said the transfer only affected "commercial real estate customers, not people who happen to have a property they use for their business".
Many of the loans transferred contain embedded interest rate swap products, which could mean their sales will now be reviewed by the bank in a formal process supervised by the Financial Services Authority.
However, as The Herald has reported, fixed-rate loans with embedded swaps are excluded.
The spokesman said all customers whose sales were eligible for review would be "treated the same, irrespective of whether they are being transferred or not".
A Glasgow businessman representing a group of Clydesdale customers, all members of the 750-strong Bully-Banks campaign, said he believed the CRE portfolio had been designated "toxic" largely because of interest rate swap breakage fees which had inflated SME borrowers' liabilities.
The businessman said: "It
is very likely that virtually all of this toxic portfolio consists of SMEs whose breakage penalties are enormous, but who have not yet defaulted on monthly payments, and so they are continuing trade in severe financial difficulties and do not know what the bank intends to do."
He added: "Even Clydesdale/Yorkshire Bank SMEs with no swap breakage penalties are at the mercy of the bank, because they are unable to re-bank due to other banks' lack of appetite to lend."
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