SYDNEY, Nov 10 (Reuters) - National Australia Bank (NAB) is raising A$2 billion ($1.35 billion) in a share placement to strengthen its balance sheet and 'take advantage of organic growth opportunities', the bank said on Monday.
The nation's biggest lender cited more favourable market conditions for its move, which it said would be equivalent to expected shortfalls in its dividend reinvestment plan.
The share proceeds would take its tier-one capital adequacy ratio to about 8.0 percent, NAB added.
Australian banks have so far largely weathered the subprime mortgage crisis and subsequent global credit squeeze without too many major problems, unlike their peers in the United States and Europe.
But with growing signs of a global recession, even Australian banks will be forced to restructure their businesses and raise more capital, according to analysts.
A number of recent failures among Australian companies has also added to fund raising pressures at major banks.
Last month NAB reported a quadrupling in bad debt charges and a 28 percent drop in second-half cash profit.
The NAB placement, underwritten by Goldman Sachs JBWere, Merrill Lynch and UBS AG, Australia Branch, would be followed by an offer to retail shareholders to participate in a non-underwritten share purchase plan.
The plan would allow ordinary shareholders to subscribe for up to A$10,000 worth of NAB ordinary shares, the bank said, adding it would reserve the right to scale back applications if total demand exceeded A$250 million.
($1=1.477 Australian Dollar)
(Reporting by Mette Fraende; editing by Jonathan Standing) Keywords: NAB/ (mark.bendeich@thomsonreuters.com; +612 9373 1817; mark.bendeich.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. 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.
The nation's biggest lender cited more favourable market conditions for its move, which it said would be equivalent to expected shortfalls in its dividend reinvestment plan.
The share proceeds would take its tier-one capital adequacy ratio to about 8.0 percent, NAB added.
Australian banks have so far largely weathered the subprime mortgage crisis and subsequent global credit squeeze without too many major problems, unlike their peers in the United States and Europe.
But with growing signs of a global recession, even Australian banks will be forced to restructure their businesses and raise more capital, according to analysts.
A number of recent failures among Australian companies has also added to fund raising pressures at major banks.
Last month NAB reported a quadrupling in bad debt charges and a 28 percent drop in second-half cash profit.
The NAB placement, underwritten by Goldman Sachs JBWere, Merrill Lynch and UBS AG, Australia Branch, would be followed by an offer to retail shareholders to participate in a non-underwritten share purchase plan.
The plan would allow ordinary shareholders to subscribe for up to A$10,000 worth of NAB ordinary shares, the bank said, adding it would reserve the right to scale back applications if total demand exceeded A$250 million.
($1=1.477 Australian Dollar)
(Reporting by Mette Fraende; editing by Jonathan Standing) Keywords: NAB/ (mark.bendeich@thomsonreuters.com; +612 9373 1817; mark.bendeich.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. 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.