Australia's NAB Hastens U.K. Exit

By Robb M. Stewart 

MELBOURNE, Australia-- National Australia Bank Ltd. retreated further from the U.K. market with a deal to sell GBP1.2 billion ($1.9 billion) in higher-risk commercial-real-estate loans to a U.S. private-equity firm.

The sale of the loans to Cerberus Global Investors follows a similar agreement in late July to sell a GBP625 million bundle of largely nonperforming U.K. commercial-real-estate debt to the same firm.

The latest deal reduces NAB's troubled commercial-real-estate portfolio in the U.K. to GBP836 million from GBP5.6 billion when the Australian bank started backing away from the loans in October 2012.

The sale of the loans also means the bank is able to stop recognizing those assets on its balance sheet. NAB estimates it will lead to about GBP127 million in capital being released at a time when Australian banks face calls to lift capital buffers against future potential financial crises.

Andrew Thorburn, who took over as NAB's chief executive at the beginning of August, has hastened the bank's exit from overseas markets and made plain an intention to leave the U.K., where NAB owns Glasgow-based Clydesdale Bank and Yorkshire Bank. The lender recently floated a stake in its sole U.S. business, Great Western Bancorp Inc., and plans eventually to sell the business outright.

The latest parcel of assets being sold to Cerberus were mainly defaulted and high loan-to-value loans, where the value of the loan is high compared with the value of the asset the loan is taken against, making it riskier. Mr. Thorburn said the remaining loans in the portfolio were mainly strongly performing ones.

Write to Robb M. Stewart at [e-mail]

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