National Australia Bank (NAB) on Wednesday said it would raise up to 2.75 billion dollars (2.24 billion US) in a share issue to boost its balance sheet as bad debts rise in a tough economic climate.
NAB said stocks worth two billion dollars would be sold to institutional investors with up to 750 million dollars offered to small shareholders, after bad debts rose to 1.064 billion for the June quarter.
"This capital raising not only ensures we maintain a strong balance sheet position, but also provides us with the flexibility to support our existing customers," chief executive Cameron Clyne said in a statement.
NAB in April said half-year bad debts were 1.8 billion dollars, up from just 700 million a year earlier.
However, the bank said its performance remained good despite the global downturn. Australia's banks were largely unscathed by the credit crisis that engulfed other financial institutions around the world.
"Our businesses continue to deliver solid performance despite the subdued economic environment," Clyne said.
The institutional placement is fully underwritten at a minimum price of 21.20 dollars, 10 percent below its last traded price of 23.58.
Copyright 2009 AFP Asian Edition
