By Sonali Paul and Mette Fraende
MELBOURNE/SYDNEY, July 22 (Reuters) - National Australia Bank plans to raise up to A$2.75 billion ($2.25 billion) through a share sale to help fund growth opportunities, including acquisitions, the country's top lender said on Wednesday.
NAB's announcement it is eyeing potential purchases comes just a month after it bought most of British insurer Aviva Plc's Australian businesses from A$825 million to expand in wealth management. The planned share sale follows an A$3 billion issue made in November and took some analysts by surprise.
'It was a bit of a surprise given we are at the worst of the problems now, and they appear to be adequately capitalised already,' said Peter Vann, head of investment research at Constellation Capital Management.
Vann said further acquisitions by NAB would be viewed positively, with any overseas expansion in the United States creating synergies.
'Given they've got Great Western in the States, if they can find something of a like nature, that would get them some extra synergies.'
'That really is a fairly safe business, quite immune to all the risk we are seeing elsewhere in the States,' Vann said.
NAB bought Great Western Bancorporation in November 2007 for US$798 million, a regional agribusiness bank in South Dakota.
The bank is also active in the commercial lending, wealth management distribution and insurance agency sectors.
Chief Executive Cameron Clyne said on Wednesday another area the group was looking to expand in was serving small to mid-sized businesses and had already hired 122 new bankers to increase its market share. The Aviva unit's acquisition was the first under Clyne.
BAD DEBTS CONTINUE TO RISE
NAB also said its June quarter cash earnings were A$900 million, with revenue growth down from the first half. It reported a 9.4 percent fall in cash profit in the first half to A$2 billion.
Asset quality had weakened as expected, with its bad loan rate increasing to 177 basis points at the end of June from 138 basis points in the previous quarter.
The group charge for bad and doubtful debts was A$1.06 billion for the quarter, compared with A$1.8 billion for the first half. The numbers were in line with expectations, Vann said.
'Its around expectations. Bad debts have gone up, arrears have gone up,' he said.
The share placement, underwritten by Deutsche Bank , Goldman Sachs JBWere and Bank of America's Merrill Lynch, will be priced at at least A$21.20 against NAB's last trade at A$23.58, aiming to raise A$2 billion.
It will offer retail shareholders up to A$750 million in new shares, not underwritten.
Trading in the company's shares was halted in both Australia and New Zealand pending the placement.
The bad-debt rate at its UK banks was at 259 basis points at June 30, up 60 basis points from the previous quarter.
($1=1.223 Australian Dollar)
(Editing by Muralikumar Anantharaman)
((sonali.paul@thomsonreuters.com; +61 3 9286 1419; Reuters Messaging: sonali.paul.reuters.com@reuters.net)) Keywords: NAB/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
MELBOURNE/SYDNEY, July 22 (Reuters) - National Australia Bank plans to raise up to A$2.75 billion ($2.25 billion) through a share sale to help fund growth opportunities, including acquisitions, the country's top lender said on Wednesday.
NAB's announcement it is eyeing potential purchases comes just a month after it bought most of British insurer Aviva Plc's Australian businesses from A$825 million to expand in wealth management. The planned share sale follows an A$3 billion issue made in November and took some analysts by surprise.
'It was a bit of a surprise given we are at the worst of the problems now, and they appear to be adequately capitalised already,' said Peter Vann, head of investment research at Constellation Capital Management.
Vann said further acquisitions by NAB would be viewed positively, with any overseas expansion in the United States creating synergies.
'Given they've got Great Western in the States, if they can find something of a like nature, that would get them some extra synergies.'
'That really is a fairly safe business, quite immune to all the risk we are seeing elsewhere in the States,' Vann said.
NAB bought Great Western Bancorporation in November 2007 for US$798 million, a regional agribusiness bank in South Dakota.
The bank is also active in the commercial lending, wealth management distribution and insurance agency sectors.
Chief Executive Cameron Clyne said on Wednesday another area the group was looking to expand in was serving small to mid-sized businesses and had already hired 122 new bankers to increase its market share. The Aviva unit's acquisition was the first under Clyne.
BAD DEBTS CONTINUE TO RISE
NAB also said its June quarter cash earnings were A$900 million, with revenue growth down from the first half. It reported a 9.4 percent fall in cash profit in the first half to A$2 billion.
Asset quality had weakened as expected, with its bad loan rate increasing to 177 basis points at the end of June from 138 basis points in the previous quarter.
The group charge for bad and doubtful debts was A$1.06 billion for the quarter, compared with A$1.8 billion for the first half. The numbers were in line with expectations, Vann said.
'Its around expectations. Bad debts have gone up, arrears have gone up,' he said.
The share placement, underwritten by Deutsche Bank , Goldman Sachs JBWere and Bank of America's Merrill Lynch, will be priced at at least A$21.20 against NAB's last trade at A$23.58, aiming to raise A$2 billion.
It will offer retail shareholders up to A$750 million in new shares, not underwritten.
Trading in the company's shares was halted in both Australia and New Zealand pending the placement.
The bad-debt rate at its UK banks was at 259 basis points at June 30, up 60 basis points from the previous quarter.
($1=1.223 Australian Dollar)
(Editing by Muralikumar Anantharaman)
((sonali.paul@thomsonreuters.com; +61 3 9286 1419; Reuters Messaging: sonali.paul.reuters.com@reuters.net)) Keywords: NAB/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
