Reuters: Financial Services and Real Estate: UPDATE 1-Australia's NAB to restructure UK banks, H1 cash profit up

Reuters: Financial Services and Real Estate Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Australia's NAB to restructure UK banks, H1 cash profit up Apr 29th 2012, 23:37 Sun Apr 29, 2012 7:37pm EDT * NAB sees $740 million costs, writeoffs for UK restructuring * Unaudited H1 cash profit up 5.7 pct to A$2.82 bln * Bad debts rise 14.4 pct to A$1.13 bln * NAB sees interim dividend upped to 90 cents MELBOURNE, April 30 (Reuters) - National Australia Bank plans to cut the size of its loss-making UK operations after deciding it was too hard to sell or expand the business in a depressed market and flagged a record first half cash profit. NAB, which has been reviewing its UK unit that comprises over 300 Clydesdale and Yorkshire branches, said it planned to cut 1,400 jobs in UK by 2015, close some back offices and move the vast majority of the UK unit's commercial real estate exposure valued at 6.2 billion pounds ($10.07 billion) to the parent. NAB announced the review of its UK unit in February after concluding the UK economic recovery would take much longer than previously expected and to arrest the rising bad debts from the business. "It's not as good as extricating themselves entirely. But in the last couple of months people pretty much came to the conclusion that they weren't going to be able to do that," said Andrew Martin, a portfolio manager at Alphinity Investment Management, which manages more than A$300 million in funds. "They're focusing on the good bits...and ultimately trying to make that business a lot more profitable and potentially one day in the future more attractive to someone else, would be my guess. But that's not a near term thing. That's a long term thing," Martin said. NAB on Monday its first half cash earnings was A$2.82 billion ($2.94 billion) up 5.7 percent on year though on a statutory basis net profit would fall 15.6 percent to A$2.05 billion to reflect non-cash charges largely from UK. In addition to the 195 million pounds in restructuring costs, NAB will write down the goodwill associated with Clydesdale of 141 million pounds and set aside a further 120 million pounds in payment protection insurance. Profits were roughly in line with what some analysts expected, although its bad debt charge rose 14 percent to A$1.13 billion. NAB said it expected to increase its interim dividend to 90 cents a share. The UK unit, which had 33.5 billion pounds in gross loans, will focus on focus on retail and small business lending in UK cut its risk appetite and improve the banks' returns, it said. "The action we are taking is needed to adapt to this current economic environment in the UK, and to reposition the UK Banking business to improve returns for the Group over the medium term," NAB chief executive Cameron Clyne said in a statement. NAB said the changes would cut the reliance on wholesale funding for the UK unit that had turned expensive after credit rating downgrades and move the business to a more deposit funded base. The restructure would cut the stand-alone tier I capital ratio, a measure of a bank's ability to absorb losses, of the group by 17 basis points NAB said adding it expected its group tier 1 capital ratio to be about 10 percent as at March 2012. Link this Share this Digg this Email Reprints

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