Clydesdale along with their sister bank Yorkshire Bank, both owned by NAB of Australia, are not renewing business loans when they expire as they attempt to extract themselves from the UK legacy debt.
This is not just limited to these banks; many other banks are in the same situation, an example being loan debts taken over by the Co-operative Bank with respect to Britannia.
We have also seen a number of cases where banks who are trying to extract themselves from the business lending and buy to let markets are not renewing business loans and, in some cases, attempting to pull loans mid-term using spurious alleged covenant breaches even though payments are being maintained up to date.
A common bone of contention, with respect to banks attempting to foreclose on a loan mid-term, is the utilisation of the loan to value covenant; however this is not necessarily justifiable in its own right as with all economic cycles the value of properties change throughout the period of the loan.
So it is quite common for us to be able to intervene successfully in this regard and allow the facility to run its full course, or enable our client to refund the loan and/ or project in a structured way.
However, if the loan is running its full course it is wise to get ahead of the game before the renewal date. We have been able to negotiate an extension in some circumstances to buy the time necessary to replace the funding and/ or negotiate a reduced settlement figure, but leaving it to the last minute will provide much more control of the situation into the banks hands.
13 April 2015 By Mel Loades