Bad debts worsen at Clydesdale

The owner of the Clydesdale and Yorkshire banks has seen a deterioration in bad debts after the UK's economic recovery faltered at the end of 2010.

National Australia Bank said the UK business continued to "demonstrate... resilience" but that the ratio of distressed assets rose to 3.3 per cent at the end of December from 3.2 per cent at the end of the previous quarter. Demand for credit has also been subdued but NAB said it was on track to deliver its two-year pledge to advance £10bn of new lending to businesses and mortgage customers by October.

NAB said the economic outlook is weak with a slow recovery expected due partly to austerity measures.