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National Australia Bank plans US IPO of Great Western Bank

NAB picked up regional lender Great Western in 2008 for just below $US1 billion ($1.1 billion) to get more involved in funding agribusiness in the United States. NAB picked up regional lender Great Western in 2008 for just below $US1 billion ($1.1 billion) to get more involved in funding agribusiness in the United States.
National Australia Bank has confirmed it will file for an initial public offering of its US subsidiary, Great Western Bank.

NAB, Australia's No. 4 lender by market value, has tapped investment banks Deutsche Bank and Bank of America Corp to lead the US public offering of the South Dakota-based bank, sources said.

In a statement, NAB said it plans to sell 100% of its ownership of GWB over time, subject to market conditions.

It is anticipated that the IPO will launch in the fourth quarter of the 2014 calendar year, with the relevant dates, pricing and volume information, and the related NAB Group financial impacts to be available around the time of launch.

NAB Group Chief Executive Officer Andrew Thorburn said plans to sell Great Western Bank were consistent with NAB's strategy to focus on its core franchises in Australia and New Zealand.

"We have been clear that our strategic direction is to concentrate on building a stronger core Australian and New Zealand business and improving the experience for our customers.  The IPO of the US-based Great Western Bank provides us with the opportunity to further focus our attention on our core business," Mr Thorburn said.

"As we continue to strengthen our core Australian and New Zealand franchises we've made the decision that now is the right time for a staged sale of Great Western Bank."

NAB picked up regional lender Great Western in 2008 for just below $US1 billion ($1.1 billion) to get more involved in funding agribusiness in the United States, but the operation lacks the scale of larger competitors in the western states where it operates.

Now the flagship of the Australian bank's US banking operations, Great Western has about 200 locations in several states including Arizona and Colorado and has assets in excess of $US8 billion, according to its website.

Australia's four biggest banks - NAB, ANZ, Commonwealth Bank and Westpac - are investor favorites for their lofty dividends and record profits.

But NAB shares have underperformed rivals', partly due to problems at its UK businesses, Yorkshire Bank and Clydesdale Bank.

While NAB posted a 7 per cent rise in third-quarter unaudited cash profit in August, its British business has been weighing on its performance and investors are watching for the bank's potential exit from the UK assets.

The move to list Great Western is the first major step since Andrew Thorburn took over as NAB's group chief executive on August 1. Analysts have suggested that Thorburn's focus would be to turn around the struggling UK banking businesses.

"We believe that there will be no 'sacred cows' at NAB" now, Macquarie wrote in a research note recently. "This means, given both a new chief executive and chief financial officer, the divestment and balance sheet cleanup story will accelerate, releasing value for shareholders."

Great Western will join much larger lender Citizens Financial Group Inc, the US unit of Royal Bank of Scotland Group, in the queue of banking IPOs.

Citizens, which has $US122.2 billion of total assets and about 1,370 branches in 12 states, in May filed with US regulators for a proposed offering.

Several financial institutions have gone public this year, including Ally Financial Inc, investor Wilbur Ross-backed Talmer Bancorp Inc and Texas-based Green Bancorp Inc.

Source: Sydney Morning Herald BusinessDay with Reuters

 

Last modified onFriday, 29 August 2014 01:40

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