NATIONAL Australia Bank is eyeing the sale of a £600 million-plus portfolio of non-performing loans in Britain, aiming to take advantage of better demand for commercial real estate.
NAB, which has long been under pressure to resolve its troubled British operations, has appointed investment bank Morgan Stanley to market the portfolio, believed to be worth £600m-£650m ($1 billion-$1.1bn), sources said.
First-round bids are expected by the end of next month, according to British commercial property publication Estates Gazette, which first reported the deal.
The news comes as NAB chief executive Cameron Clyne prepares to hand the reins to Andrew Thorburn in August.
Analysts believe the change could drive a shake-up of the British business after years of weighing on the group’s returns.
A spokesman for NAB said the bank did not comment on “market speculation”.
Since 2012, NAB has been running off £5.6bn of British commercial real estate loans transferred to the group from Clydesdale Bank.
At March 31, the book had run down to £3.3bn and Mr Clyne this month said the bank would “continue to look at options to accelerate that progress”.
“You would think they’ll do something,” said a senior investment banker, who declined to be named.
“The market is pretty good for them at the moment.”
The environment for selling the British commercial real estate portfolio has improved in the past 18 months as the economy finally picks up steam after the global financial crisis.
In December, Lloyds sold a £147m pool of non-performing corporate loans secured by 31 hotels to private equity firm Cerberus for £90m, a 39 per cent discount.
About 18 months ago, impaired portfolio discounts were a larger 50 per cent.
NAB might “look to sell the remaining commercial real estate portfolio” given the improved valuations, Macquarie analysts told clients earlier this year.
The improving economy and rise in appetite for banking assets — Lloyds is floating an offshoot called TSB — has also raised hopes that NAB may be able to offload the Clydesdale and Yorkshire banks.
But ongoing uncertainty about misconduct charges and Scotland’s looming independence referendum has left some analysts unconvinced a sale is imminent.
UBS analysts also believe that the most attractive asset — Clydesdale’s business bank — is shrinking.Author : MICHAEL BENNETSource : The Australian