NAB in $2.3bn deal with WAMU

National Australia Bank has sold its US mortgage operation, HomeSide, to Washington Mutual Inc for AU$2.3 billion.

The latest sale includes the unit&#39s mortgage servicing rights and follows the sale in 2001 of HomeSide&#39s mortgage origination business, also to Washington Mutual.

NAB chief executive officer Frank Cicutto said: “This represents a complete exit from our mortgage banking business in the US.”

The sale expected to be completed in October 2002 will enable the bank to extend its share buyback program by AU$750 million to September 2003.

NAB said it agreed to sell SR Investment Inc, the parent company of HomeSide Lending Inc to Washington Mutual for about $1.3 billion, or AU$2.3 billion.

This will result in NAB exiting all mortgage servicing rights and related financial hedges associated with a mortgage portfolio which is projected to be about $131 million at closing.

NAB said it would book a loss of AU$104 million to cover transaction costs, closing provisions and balance sheet adjustments for the deal.

NAB will retain a portfolio of about $300 million of government guaranteed mortgages. But no mortgage servicing rights is associate with this portfolio.

The group said the sale is expected to improve its capital ratio and release about AU$ 490 million of capital.