Small business customers of Clydesdale Bank whose property-backed loans were transferred to National Australia Bank two years ago have been asked to supply their passports for a new identity check.
The NAB Customer Support Group has said customers have been told the checks are "routine" but it suspects they are connected with the sale of NAB's UK loan portfolios - one of which was yesterday reported to have been sold to a US private equity buyer yesterday for £485million.
NAB's UK Commercial Real Estate division has sent letters and e-mails to Clydesdale and Yorkshire bank customers on the ID check.
One e-mail says the bank is "updating its borrower ID details in line with current regulatory compliance requirements".
Meanwhile a letter says the bank is "preparing the annual review papers for the above loan".
It is requiring customers to have copies of their passport or driving licence, and proof of address, certified by a "local bank manager" or solicitor.
John Glare of the NAB Customer Support Group said he knew so far of 13 of its members who had been asked for the ID, suggesting hundreds of customers were affected.
In a letter to the bank's chief executive David Thorburn, and to Treasury Committee member and Scottish LibDem MP John Thurso, Mr Glare has said: "Given that much of the portfolio is about to be sold to a new owner, it is more likely that it is the purchaser who is requesting copies of passports for regulatory compliance purposes than NAB."
It was yesterday reported that US private equity firm Cerberus Capital Management had paid NAB £485m for a portfolio of non-performing loans with a balance of £674m, or a discount of nearly 30 per cent.
NAB took over the commercial property loan book of its two UK banks two years ago and has been rumoured for some time to be trying to dispose of it.
The portfolio has been shrunk from £5.6billion to £3.3bn, which some SMEs say has been accelerated by the bank calling in loans and facilities prematurely.
The bank has said it is "committed to maintaining constructive dialogue with customers throughout the remaining loan term".
A spokesman said the bank would not respond to market speculation on any disposal.
Mr Glare said it would be "wrong to explain that the copies are required for regulatory compliance purposes if the underlying reason is to simply facilitate the sale of their loan to an asset stripper".
But the Clydesdale spokesman said: "To ensure it complies with its 'know your customer' obligations, NAB's relationship managers will from time to time contact their customers to collect copies of up to date ID.
"This is simply business as usual compliance, nothing more."
The support group has been campaigning for the past two years on the exclusion from regulation of loans such as fixed rate Tailored Business Loans (TBLs) containing embedded swaps or derivatives.
The so-called embedded swap loans, of which Clydesdale and Yorkshire banks were among the biggest sellers, were not covered by the review now being wound up by the banks and the Financial Conduct Authority.
However the Treasury Committee is continuing to press the government to include them.
Mr Glare has told Mr Thorburn: "This is yet another argument that supports the case for a full review into the behaviour of NAB, in addition to a cross-bank review of fixed rate loans embedding derivatives."Author: Simon Bain
Source: Business Correspondent/Personal Finance Editor