National Australia Bank is taking advice on a new strategy for its £4bn UK non-core commercial real estate loan book.
The bank, which owns Yorkshire and Clydesdale banks, has appointed Lazard to review options for the loans.
This could result in NAB jettisoning its remaining UK exposure and exiting the UK sooner than expected as investors continue to pile into the European debt market.
In 2012, the bank announced its intention to exit UK property lending through its subsidiaries. This was part of a wider strategy to reduce its UK risk appetite and concentrate on its core markets of Australia and New Zealand.
Following the announcement it transferred £5.6bn of regional UK property loans from Yorkshire and Clydesdale to the main bank, with plans to undertake an orderly wind-down over six years. It had expected the loans to shrink to less than £2bn by 2018.
According to its first-quarter trading update, released in February, the bank’s CRE run-off portfolio continues to decline, with the balance falling from £4bn to £3.6bn over the quarter. Net of provisions, the outstanding balance is now £3.1bn.
It also said cash earnings in the NAB UK CRE run-off portfolio improved in the quarter, “reflecting the need for fewer provision top-ups to existing impaired exposures and a continuing slowdown in the emergence of impaired loans”.
NAB group chief executive Cameron Clyne said: “Particularly pleasing was the further improvement in the… NAB UK Commercial Real Estate run-off portfolio. Both continue to benefit from the restructure we undertook in 2012 and the recovery of the UK economy.”
This is not the first time the bank has drafted in real estate advisers. In 2009, PwC was appointed to dispose of a loan portfolio but is understood to have decided it was not the right time.
NAB has since also taken advice from KPMG before holding the latest beauty parade for a new adviser.
All parties declined to comment.
National Australia Bank is taking advice on a new strategy for its £4bn UK non-core commercial real estate loan book.The bank, which owns Yorkshire and Clydesdale banks, has appointed Lazard to review options for the loans.This could result in NAB jettisoning its remaining UK exposure and exiting the UK sooner than expected as investors continue to pile into the European debt market.In 2012, the bank announced its intention to exit UK property lending through its subsidiaries. This was part of a wider strategy to reduce its UK risk appetite and concentrate on its core markets of Australia and New Zealand.Following the announcement it transferred £5.6bn of regional UK property loans from Yorkshire and Clydesdale to the main bank, with plans to undertake an orderly wind-down over six years. It had expected the loans to shrink to less than £2bn by 2018.According to its first-quarter trading update, released in February, the bank’s CRE run-off portfolio continues to decline, with the balance falling from £4bn to £3.6bn over the quarter. Net of provisions, the outstanding balance is now £3.1bn.It also said cash earnings in the NAB UK CRE run-off portfolio improved in the quarter, “reflecting the need for fewer provision top-ups to existing impaired exposures and a continuing slowdown in the emergence of impaired loans”.NAB group chief executive Cameron Clyne said: “Particularly pleasing was the further improvement in the… NAB UK Commercial Real Estate run-off portfolio. Both continue to benefit from the restructure we undertook in 2012 and the recovery of the UK economy.”This is not the first time the bank has drafted in real estate advisers. In 2009, PwC was appointed to dispose of a loan portfolio but is understood to have decided it was not the right time.NAB has since also taken advice from KPMG before holding the latest beauty parade for a new adviser.All parties declined to comment.
bridget.oconnell@estatesgazette.com
