NATIONAL Australia Bank (NAB) yesterday launched the biggest rights issue ever seen on the country’s stock market, seeking to raise A$5.5bn (£2.9bn) by Monday.
The lender also announced it is selling off British lenders, the Clydesdale Bank and Yorkshire Bank.
It is exiting the UK after several tumultuous years, and plans to list the lender on the London Stock Exchange by the end of the year.
The plan is to float stock amounting to 30 per cent of the bank, and give the remaining stock to existing shareholders. However, NAB is also open to a trade sale if other banks are interested in buying the Clydesdale.
As part of the deal, the group had to get regulatory approval, which required it to set aside an extra £1.7bn to cover any misconduct costs from fines or compensation claims against the Clydesdale.
Setting that money aside will hit the parent group’s capital ratio, which is one reason for launching the fundraising round.
The round will issue shares amounting to around eight per cent of the current number of shares in circulation, and seeks to sell them at a 19 per cent discount to the previous market price.
The shares are suspended from trading until Monday while the book is being built.
Investment bankers at Macquarie, Morgan Stanley and Bank of America Merrill Lynch are running the book.
TERMS OF THE ISSUE
■ The issue seeks to raise A$5.5bn.
■ The new shares amout to eight per cent of those already in circulation.
■ Current shareholders can buy two for every 25 shares they already own.
■ They can buy in at a 19 per cent discount on the previous trading price.