Standard & Poor's yesterday lowered its long- and short-term counterparty credit ratings on Clydesdale Bank, to A+/A-1 from AA-/A-1+. The outlook is negative.The issues behind the reduction in the credit rating of the British subsidiary of National Australia Bank are little different to those afflicting the entire banking sector in Britain, where the economic slump is expected to generate increased lending losses.S&P said it expected loan loss charges to continue to rise at Clydesdale into 2010, which could lead to NAB's British bank reporting negative earnings for the year to September 2009.Clydesdale reported a loan loss charge of £168 million for the six months to March 2009, or about 70 per cent of pre-loan loss earnings.Applying new criteria on credit loss assumptions for UK banking assets, S&P said it expected Clydesdale's mortgage book to continue to outperform its peers, but its commercial loan portfolio performance would be more in line with the sector average.S&P noted a capital injection from the bank's parent. In late 2008 National Australia Bank tipped £700 million into Clydesdale Bank in order to meet the increased capital requirements the Financial Services Authority was imposing across the banking sector.Clydesdale's muted response yesterday to this news was to publicise a rise of 30 per cent increase in mortgage approvals over May and June 2009 compared to the same period last year.