NAB has announced it will sell £1.2 billion of high risk loans from its UK Commercial Real Estate (CRE) portfolio to focus on its Australian and New Zealand arms.
The loans being sold are mainly defaulted, watch and high LVR loans, with the sale reducing the higher risk loans in the portfolio by 93%.
As a result of the sale, an estimated £127 million of capital will be released for the NAB Group. The balance of the portfolio will be reduced to £836 million, compared to the original balance of £5.6 billion in October 2012 when the run-off portfolio was first established.
NAB Group chief executive
Andrew Thorburn said NAB had accelerated the run-off of the NAB UK CRE portfolio to focus on its strong Australian and New Zealand franchises.
“This is an important step forward, effectively bringing closure to one of our legacy positions. The sale of these higher risk loans in the NAB UK CRE portfolio is another important milestone in our strategy of reducing our low returning legacy assets and sharpening our focus on our core Australian and New Zealand franchises,” he said.
In the bank’s financial year to September 2014, housing lending in the Australian market increased by $15.1 billion, or 6.5%, on the previous financial year.
