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Australia's NAB to demerge British business, raise capital
[SYDNEY] National Australia Bank announced plans Thursday to raise A$5.5 billion (S$5.8 billion) in capital and demerge its British banking business as it posted a 20.4 per cent jump in half-year net profit.
The country's fourth biggest lender recorded net profit of A$3.44 billion in the six months to March 31.
Cash profit, the industry's preferred measure which strips out volatile items, rose 5.4 per cent to A$3.32 billion.
The numbers were announced as the bank went into a trading halt ahead of a rights issue to raise A$5.5 billion, primarily to bolster the balance sheet and provide a buffer to meet tougher regulatory requirements.
NAB chief executive Andrew Thorburn said it would also help the bank exit its troubled British operations, which include Clydesdale Bank, by the end of the year.
"In relation to exiting our UK banking business, we have been examining a broad range of options including those provided by public markets," he said.
"It is a priority to exit this business, and we are today announcing our intention to pursue a demerger and IPO of the UK banking business."
He added that a strong balance sheet had always been a priority at NAB "which is why we are today announcing that we will be raising US$5.5 billion of capital through a rights issue".
"The capital raising facilitates our proposed exit from the UK banking business and positions us ahead of anticipated regulatory changes.
"While there is still much more to be done, we are clear about our priorities and are focused on what needs to be achieved," he added.
The bank will look to demerge 70 to 80 per cent of Clydesdale to NAB shareholders while the remaining 20 to 30 per cent will be sold through an initial public offering to institutional investors.