UPDATE 1-UK group action against Clydesdale, Australia's NAB heads to High Court

* Small companies allege deceit, misrepresentation

* Group claim has grown to 509 businesses - RGL

* Court hearings on TBL loans scheduled for December

* Claim is without substance-Clydesdale parent Virgin Money
(Adds comment from expert, background)

By Kirstin Ridley

LONDON, Oct 15 (Reuters) - Almost 370 businesses have joined
a group action suing Clydesdale Bank and its former
owner National Australia Bank in a dispute over small
business loans that is set for its first day in London's High
Court in December.

The group, which alleges businesses were deceived between
2001 and 2012 when buying fixed rate Tailored Business Loans
(TBLs), has snowballed since last year's launch and now
represents 509 smaller businesses and 867 individual loans,
according to claims management company RGL Management.

RGL, which filed the latest tranche of claims on Thursday,
alleges smaller businesses were wrongly told they faced hefty
costs for terminating fixed-rate TBL loans early and that banks
inflated interest rates.

RGL is alleging deceit, misrepresentation, breach of
contract and unjust enrichment by the banks, adding that TBL
borrowers "unknowingly and unnecessarily paid hundreds of
millions of pounds" of additional costs and interest.

Clydesdale parent Virgin Money UK dismissed the case as
without substance or merit, adding it would continue to defend
its position robustly.

"Over recent years we have worked hard to investigate all
historic SME (small and medium-sized enterprise) conduct issues
and we are confident we have done the right thing for those
customers involved," a spokesman said.

NAB said it did not comment on matters before the court.

A one-and-a-half day pre-trial hearing has been scheduled
between Dec. 14 and 16.

More than 6,000 customers of Clydesdale and its Yorkshire
Bank brand bought around 8,000 TBLs with embedded interest rate
hedging features, classified as unregulated, commercial loans,
that left customers facing heavy costs to unwind the hedge if
they wanted to renegotiate the loan as interest rates fell.

Abhishek Sachdev, a derivatives expert, says a vast number
borrowers, ranging from unsophisticated SME customers to large
local authorities, were sold derivatives embedded into loans
without their knowledge or understanding.

($1 = 0.7674 pounds)
(Reporting by Kirstin Ridley; Editing by Mark Potter)