11 Nov 2012

NAB to settle legal action by investors

10:41 am on 11 November 2012

National Australia Bank has agreed to pay around $A115 million to settle a case brought against it by shareholders.

Legal action was taken by a group of investors over related to the level of disclosure on NAB's exposure to certain financial derivatives.

NAB says it has agreed to pay the claimants $A85 million plus an allowance in respect of interests and costs to settle the class action.

Maurice Blackburn, the law firm representing the litigants, says the total payment from NAB including interest and costs is $A115 million.

It says the class action was brought against the bank by more than 15,000 shareholders who lost money when NAB suffered a big share price drop after revealing in July 2008 that it had lost up to $A1 billion in the US subprime mortgage crisis.

The investors, who acquired NAB shares between 1 January and 24 July 2008, claimed that the bank failed in its disclosure duties by not informing them of the US exposure earlier.

The bank says $A50 million of the payment is comprised of available insurance proceeds and the rest has already largely been written off, meaning the settlement will have no material impact on its bottom line.

NAB, the parent company of BNZ Bank, says the settlement contains no admission of liability by the bank and was a purely commercial decision made in the interests of shareholders.

The settlement is subject to the approval of the Victorian Supreme Court.