National Australia Bank Plans US Exit with Great Western Bank IPO

In a move that many believe is intended to strengthen National Australia Bank’s (NAB) tier one capital ratio, the Australian-based banking institution is offloading its US business Great Western Bank through a stock market float in the last quarter of the year. The IPO for the USE bank could raise a healthy $2 billion for NAB.

The company bought Great Western Bank in 2007. Newly appointed chief executive Andrew Thorburn, however, is looking to clean up the bank’s overseas operations to shift the institutions primary focus onto its core Australian business. Since he took the top job at the beginning of August, Thorburn has since reshuffled the bank’s top executive ranks and flagged further provision costs in the bank’s UK business, which NAB may also be looking to offload in the future.

"We have been clear that our strategic direction is to concentrate on building a stronger core Australian and New Zealand business and improving the experience for our customers,” said Thorburn. “The IPO of the US-based Great Western Bank provides us with the opportunity to further focus our attention on our core business. As we continue to strengthen our core Australian and New Zealand franchises we've made the decision that now is the right time for a staged sale of Great Western Bank."

The prospectus NAB lodged with the US Securities and Exchange commission valued Great Western Bank at $1.53 billion, with $700 million in goodwill. Analysts believe NAB could get a price between $US1.7 billion and $US2.5 billion for the US-based bank. Investors were encouraged by this news, as shares for NAB climbed 1.1 percent in early trade at the end of last week.

Information sourced from The Sunday Morning Herald.