(18 March 2010 – Australia) National Australia Bank has disclosed for the first time the extent of the damage caused by a A$18.4 billion troubled portfolio.The bank reported this week that over the past two years it has suffered losses of A$1.3 billion as a result of NAB’s portfolio of troubled credit instruments.
BusinessDay reported that NAB had warned the portfolio was expected to take years to wind down, however insisted that the health of the assets had stabilised.
The bank has said that around 60 percent of its portfolio is low risk; however the remaining ‘junk or sub-investment grade’ exposure had investors unsettled.
NAB’s collateralised debt obligations portfolio, housed in a unit called specialised group assets, reported steep losses over the past two years.
The specialist group assets returned a loss of A$748 million in 2008 and A$577 million last year.
NAB’s executive general manager, Peter Thodey, told BusinessDay, that he expects the portfolio to take about eight years to wind down, with its exposure expected to fall to A$10 billion by 2013.