Australia's NAB to sell insurance stake to Nippon Life, divest British bank

[SYDNEY] National Australia Bank on Wednesday announced the sale of an 80 per cent stake in its insurance business to Japan's Nippon Life for US$1.7 billion and plans to divest troubled British asset Clydesdale Bank.

The lender outlined the moves in posting a 19.7 per cent lift in annual net profit to A$6.34 billion (S$6.38 billion) as it looks to bolster its balance sheet and provide a buffer to meet tougher regulatory requirements.

Cash profit, the industry's preferred measure which strips out volatile items, rose 15.5 per cent to A$5.84 billion with six-monthly dividends remaining at 99 cents.

NAB had been in a trading halt since Tuesday with speculation rife that Nippon was taking a large stake in the life insurance business, and the bank confirmed the transaction for A$2.4 billion.

"Our wealth business has delivered significantly improved results since 2013, which has enabled us to secure the long term partnership we are announcing today," chief executive Andrew Thorburn said.

"This partnership will enable us to continue to deliver insurance solutions to our customers while improving wealth returns for shareholders." NAB also announced a timetable for a demerger and initial public offering for its poorly performing British business Clydesdale Bank, which it acquired in 1987.

Thorburn said NAB planned to spin off 75 per cent of the asset to NAB shareholders while the remaining 25 per cent would be sold through an IPO to institutional investors in February next year.

"Significant progress has been made on the proposed transaction, including advanced engagement with key regulators and listing authorities in both jurisdictions," he said.

"(Once completed) we will have exited all our low returning offshore businesses, allowing us to fully focus on serving our priority customer segments and leveraging the investments we have made in Australia and New Zealand."

AFP