Moody’s placed on review for downgrade Clydesdale Bank’s A2 rating today (Wednesday) following an announcement that the UK bank’s parent, National Australia Bank, is to carry out a strategic review of its subsidiary.

NAB expects to conclude this review by May, and Moody’s understands that the strategic review will look to reposition the business mix and structure in the currently challenging economic environment in the UK and improve returns.

While Moody’s said it does not expect the outcome of the strategic review to dramatically change Clydesdale’s credit profile, the rating review will focus on the extent to which the strategic review leads to any changes in the future shape of Clydesdale and any impact that this will have on profitability and funding.

“At this stage Moody’s does not expect to changes its assumptions regarding parental support to Clydesdale from NAB,” said the rating agency, noting that if the likelihood of a sale of the bank was to increase as a result of the strategic review this would additionally need to be revisited. Moody’s assumption of parental support results in a uplift of one notch.

A change in the Baa1 baseline credit assessment to Baa2 would likely lead to a downgrade of the A2 rating, said Moody’s.