NAB Says A$1.44 Billion Wealth Sale Frees It to Focus on Core Businesses

   By Alice Uribe 
 

SYDNEY--National Australia Bank Ltd. said the sale of its MLC Wealth unit to IOOF Holdings Ltd. for 1.44 billion Australian dollars (US$1.06 billion) will allow it to focus on its core banking business.

NAB Chief Executive Ross McEwan said the divestment would free Australia's third largest lender by market size to invest elsewhere and focus on delivering a simpler, more streamlined organization.

NAB said it will receive A$1.24 billion in cash and A$200 million in the form of a 5-year structured subordinated note in IOOF, which it said would allow it to benefit from any medium-term value created through the combination of MLC and IOOF.

In addition, NAB also said it expected to receive approximately A$220 million of surplus cash from MLC in the form of a pre-completion dividend.

NAB anticipates its Core Equity Tier 1 capital will increase by approximately 30 basis points following the sale, resulting in a pro forma CET1 ratio of approximately 11.9%.

The transaction is estimated to result in a post-tax loss of approximately A$400 million, which includes estimated post-tax separation and transaction costs of approximately A$200 million, NAB said.

The transaction includes MLC's advice, platforms, superannuation and investments and asset management businesses. NAB said it will retain legal ownership of MLC's advice entities, for the purpose of completing advice-related remediation programs.

Australia's major banks have largely been casting off their advice businesses in the wake of the country's royal commission into the sector which uncovered a range of misconduct and prompted billions of dollars in remediation.

Write to Alice Uribe at [e-mail]

(END) Dow Jones Newswires

August 30, 2020 20:51 ET (00:51 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.