Regional auction firms are expecting the exit of Clydesdale and Yorkshire banks from commercial property lending to trigger a rise in distressed assets being offered for sale.
The banks were two of the diminished number of active lenders outside the South East.
National Australia Bank, the owner of the two lenders, said last month that the banks’ £6.2bn commercial property portfolios would be transferred to NAB from early next year and run down to less than £2bn by the end of 2018.
NAB also said that it had made a £282m charge in its accounts for bad loans, mainly in the commercial property market.
Stephen Swainson, auctioneer at Preston-based Pugh & Co, said it had already acted for both banks in the sale of repossessed assets. “The consequence of their ‘official exit’ from lending into the sector will be a rise in distressed assets for sale,” he said.
Investor Vishal Patel of Prideview Properties said the banks’ departure would only heighten the perception that “cash is king” at auction.
He added: “Buyers are much more selective about what they put their cash into. People are now looking at their exit strategy from the beginning and in seeing so many banks exiting the lending arena they are taking a much longer-term view.”
Sean Vigers, auctioneer at Scotland-based SVA, said it was clear that Clydesdale had been downsizing its commitments for some time. “They are being realistic and not getting rid of stuff at any price, but they are certainly having a serious look at stock which is under pressure and asking us all the right questions,” he said.
The banks announced their decision after a strategic review. They had reduced their commercial property lending by 11.3% over the past 12 months, compared with the previous period.
Estelle.maxwell@estatesgazette.com
