Rush for new NAB capital raising

NATIONAL Australia Bank has more than doubled the size of its share purchase plan offer after strong demand from its retail shareholders.

NAB is raising $750 million in addition to its earlier target of $500 million for a total of $1.25 billion through the share purchase plan. Australia’s third-largest bank will issue 88 million new shares to successful applicants on June 2 at an issue price of $14.15 a share.

NAB shares yesterday closed at $17.94 each and are up more than 25 per cent from their March 23 bottom of $13.19.

The lender in April raised $3 billion through an institutional share placement at the same price of $14.15 per share to provide a buffer against the coronavirus-driven economic downturn. NAB slashed its interim dividend last month and made an $807 million provision for coronavirus losses after its first-half profit halved.

“Together with our recently completed institutional placement, the capital raised through the offer will assist us to manage through a range of possible scenarios related to the COVID-19 pandemic, including a prolonged and severe economic downturn,” NAB chief executive Ross McEwan said.

The bank has previously said it expects Australia’s GDP to shrink and unemployment to rise this year. Earlier this month, it said it had paused repayments for about 80,000 home loan customers.