NAB begins HomeSide exit

Problems with HomeSide have been plaguing NAB for some time and CEO, Frank Cicutto, says the sale of assets to Washington Mutual allows the company to realise a premium while eliminating the risk associated with further generation of mortgage servicing rights.

Under the deal Washington Mutual will buy HomeSide's operating assets, primarily consisting of HomeSide's A$3.5 billion warehouse and pipeline mortgage loans.

NAB will retain the mortgage servicing rights and related financial hedges at the date of completion.

"This is a good deal in a tough selling environment, providing a range of benefits," say Mr Cicutto.

NAB says the mortgage servicing rights (MSR) asset will reduce progressively, with the company able to dispose of the MSR in whole or in part after the date of completion. Washington Mutual will service the mortgages under contract.

National Australia Bank took a huge hit to its books from HomeSide in the year ended September, writing down the business by A$3.617 billion, including A$858 million of goodwill.

NAB owns Bank of New Zealand, which contributed net profit of NZ$414 million to the parent company's recent result, up 13.4% on last year.

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