NAB admits further CDO exposure
National Australia Bank further undermined investor sentiment towards financial stocks today when it announced a further $830 million in provisioning for its exposure to collateralised debt obligations (CDOs).
The bank told the Australian Securities Exchange that the amount was additional to the $181 million charge taken in the groups’ half-year results to March 31.
Commenting on the move, NAB chief executive John Stewart said the provision reflected the unprecedented conditions in global credit markets and, in particular, the rapid deterioration in the US housing markets.
He said although current losses on assets underlying the CDOs in NAB’s portfolio related to the provisions averaged around 2 per cent of the current total portfolio, the bank’s detailed analysis and recent default activity indicated the portfolio would continue to deteriorate.
“We believe it is prudent to take a full provision now, based on a worst case scenario,” Stewart said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.