Credit rating group, Moody’s likes the NAB’s sale of its MLC wealth advisory business to IOOF.
“The sale is credit positive for NAB because it will improve the group’s capital adequacy and reduce complexity and operational risks. The sale is subject to certain conditions and regulatory approvals and the company expects to complete the sale before the middle of 2021,” Moody’s said this week in a note.
”In light of the Australian Prudential Regulation Authority’s (APRA) conservative regulatory capital calculation methodology, we consider NAB’s capital adequacy to be very strong, providing a significant buffer against unexpected losses and the uncertainty for future asset quality caused by the coronavirus outbreak,” according to Moody’s
After the $4.5 billion capital raising earlier in the year, Moody says the MLC will be a significant boost to the bank’s capital adequacy.
“The sale of MLC Wealth will also reduce complexity and operational risks for NAB,” Moody’s pointed out.
“The complexity and associated risks of wealth management businesses were highlighted during The Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry.
NAB has also established a centre for wealth remediation, which is undertaking a series of programs across the group to refund customers affected by errors in the group’s wealth management processes.
“As at 31 March 2020, NAB had set aside cumulative customer-related remediation provisions of about $A1.5 billion with respect to its wealth management operations,” Moody’s said in the note issued this week.
NAB shares rose 1.5% to $17.89.
