The bank owner reported strong profits for the final quarter of 2011 but its British subsidiary faced “increasingly difficult” trading.
NAB has announced a review of Clydesdale and Yorkshire to reposition them and improve returns. This has often been seen as a prelude to a sale.
Another option could be significant cutbacks to the scale of operations with possible job losses.
The bank has blamed the poor performance on the UK economy.
David Thorburn, chief executive, said the austerity programme of the UK government had also contributed to the harsh business environment and its decision to carry out the review.
Cameron Clyne, group chief executive, said: “It is clear that the UK economy is likely to experience a much longer period of subdued growth with the ongoing sovereign debt crisis in the eurozone and the continuing austerity program by the UK government.
“UK GDP declined by 0.2% in the December quarter. These difficult conditions have adversely affected the performance of UK Banking.
“Given our view that recovery is now a longer term prospect, NAB has commenced a strategic review and will work with UK management to appropriately reposition its business mix and structure for the changed economic environment and improve returns.
“We will inform the market of the outcomes of the review, which we expect to occur by the time of our interim result in May 2012.”
The two bank brands run out of Glasgow and within NAB, they are known only as Clydesdale Bank.
Clydesdale has been the subject of long-running speculation as the parent company has sent conflicting signals on what it wants to do with its only European operations.
With the Australian economy doing relatively well and opportunities to expand in Asia, Clydesdale Bank has been seen increasingly as a problem for its owner.
David Thorburn said: “The time is right for us to re-examine our business, given the recent reversal in the economic recovery, the structural changes in the UK banking market and our performance in that context.
“Given the right business mix and structure is vital and the review will shape that. However, it is already clear that the economics of our retail banking operation are strong.
“We will continue to support our branch network and invest in developing online and telephone banking services for both retail and business customers.”
Thorburn added that Clydesdale would also remain committed to providing support for its savers and mortgage customers across the UK.
He said: “Although re-shaping the business will mean that we will have to take tough decisions, we are confident that the outcome will provide a strong and sustainable future for Clydesdale and Yorkshire banks.”
