Clydesdale Bank's credit rating has been downgraded three notches by the credit ratings agency Moody's.
The bank's credit rating for long-term bank deposit and senior debt has fallen from A2 to Baa2, while the bank's outlook remains stable.
Moody's said it believed the bank's retail and lending divisions had been "materially weakened" following its withdrawal from the commercial lending market last year.
Both Clydesdale and Yorkshire Banks are owned by National Australia Bank (NAB).
Due to losses at Clydesdale last year, NAB took over the bank's £5.6 billion commercial loan book, as well as injecting capital into the bank.
In its report, Moody's said that: "The bank is well-capitalised and has substantial liquid assets, and we see no immediate threat to creditors from its near-term challenges."
But it added that uncertainty remained over the bank's "future strategic direction". This was in reference to NAB's intention to sell the bank over the medium term.
If you have money held in a Clydesdale Bank savings or current account there's no reason to worry - the bank is covered by the UK's Financial Services Compensation Scheme.
This means that if you have money deposited in a Clydesdale Bank product, it will be protected up to a total of £85,000.
"Moody's has kept Clydesdale Bank's outlook as stable. In its report it also acknowledged that Clydesdale is making efforts to address the challenges it faces "by strengthening its risk management and controls framework and improving efficiency through a cost reduction programme".
A Baa2 rating means the bank is only considered a moderate credit risk.
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