The National Australia Bank has announced a $5.5 billion capital raising – the biggest in Australian corporate history.
The rights issue is designed to bolster NAB’s balance sheet and to meet tougher regulatory requirements imposed in the wake of the global financial crisis.
The raising will be fully underwritten by Bank of America Merrill Lynch, Morgan Stanley and Macquarie Bank.
“A strong balance sheet has always been a priority at NAB,” chief executive Andrew Thorburn told reporters.
NAB shares will be suspended from trade on the stock exchange until close of business on Monday as the bookbuild gets underway.
The $5.5 billion capital raising overshadows NAB’s half-year after tax statutory profit of $3.44 billion up $584 million or 20.4 per cent.
NAB’s preferred cash profit measure, excluding some accounting items, was up 5.4 per cent to $3.32 billion.
The bank’s key driver of profitability, its net interest margin, fell slightly to 1.92 per cent which is the thinnest in about a decade.
NAB’s capital raising exceeds Rio Tinto in 2009, which raised $4.4 billion at the depths of the downturn.
Mr Thorburn said the capital raising will help NAB exit from its troubled UK banking business which will be sold by the end of the year.
NAB has also confirmed that its chairman Michael Chaney will retire at the bank’s annual general meeting this year.
He will be replaced by former Commonwealth treasury secretary Ken Henry, who joined the NAB board in 2011.