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Fitch Assigns A+ to NAB's Basel III Tier 2 Issue
November 20, 2014 / 5:42 AM / 3 years ago

Fitch Assigns A+ to NAB's Basel III Tier 2 Issue

(The following statement was released by the rating agency) SYDNEY, November 20 (Fitch) Fitch Ratings has today assigned a rating of A+ to National Australia Bank Limited's (NAB; AA-/Stable/aa-) EUR750m Basel III compliant Tier 2 instrument (ISIN: XS1136227094). The direct, unsecured and subordinated obligations have been issued under NAB's USD100bn Global Medium Term Note Programme. Final maturity is 12 November 2024, although NAB may redeem the notes on 12 November 2019. The notes may also be redeemed by NAB if they no longer qualify as regulatory capital, or if the tax treatment of the notes changes. In all cases the redemption can only go ahead with the Australian Prudential Regulation Authority's (APRA) written approval, and if they are replaced with similar or better quality regulatory capital instruments or APRA confirms NAB's capital position will remain adequate after the redemption. The notes include a non-viability clause and will qualify as regulatory Tier 2 capital for the bank. The notes pay a fixed rate of 2.000% up to, but not including, 12 November 2019, and the prevailing five year EUR mid-market swap rate plus 165bps thereafter. All other NAB ratings are unaffected by this action. KEY RATING DRIVERS AND SENSITIVITIES The instrument is classified as subordinated debt and is rated one notch below NAB's Viability Rating (VR) of 'aa-' to reflect its below-average recovery prospects compared with senior unsecured instruments. The notes would convert to equity in part or in full should APRA deem that NAB would be non-viable without the conversion or without a public sector capital injection. The notes would be written off in part or in full if NAB were unable to convert the notes to equity within five business days of the trigger event date. No additional notching from the VR for non-performance is applied as the VR already captures the point of non-viability. The instrument does not qualify for any equity credit under Fitch's methodology. NAB's subordinated debt ratings are broadly sensitive to the same considerations that might affect the bank's VR (see Rating Action Commentary dated 17 June 2014). Contact: Primary Analyst Tim Roche Senior Director +61 2 8256 0310 Fitch Australia Pty. Ltd., Level 15, 77 King Street, Sydney NSW 2000 Andrea Jaehne Director +61 2 8256 0343 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Leni Vu, Sydney, Tel: +61 2 8256 0326, Email: Leni.Vu@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014 and "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 31 January 2014, are available at www.fitchratings.com. Related Research - Fitch Affirms Australia's Four Major Banks, dated 17 June 2014 Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.

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