National Australia Sells $1.9 Billion of U.K. Real Estate LoansChris Bourke
National Australia Bank Ltd., the nation’s biggest lender by assets, sold a 1.2 billion pounds ($1.88 billion) package of high-risk U.K. commercial property loans to an affiliate of Cerberus Global Investors.
The Melbourne-based bank will earn a small gain from the sale and about 127 million pounds of capital will be released when the deal settles, National Australia said in a regulatory filing today. Its U.K. commercial real estate investments will shrink to 836 million pounds, compared with an original total of 5.6 billion pounds in 2012.
Chief Executive Officer Andrew Thorburn said in October that exiting the U.K. business was an “absolute priority” as he speeds up the lender’s retreat from low-returning assets. The bank already sold a 625-million-pound parcel of mostly non-performing U.K. commercial property debt to Cerberus in July.
“This is an important step forward, effectively bringing closure to one of our legacy positions,” Thorburn said in today’s statement. The remaining U.K. commercial property assets “are largely strong performing loans, and we will look at other options to manage this small remaining portfolio.”
Most of the latest debt to be sold comprises defaulted and high loan-to-value loans, and the transaction shrinks the portfolio’s higher-risk loans by 93 percent.
Thorburn, who took over from Cameron Clyne in August, has already sold almost a third of the bank’s U.S. unit through an initial public offering, changed its management team and earmarked underperforming assets for sale. He’s shifting the focus to Australia and New Zealand where the return on equity is the group’s highest.