National Australia Bank Shares Post Strong Gains After Irish Bank Sale

National Australia Bank shares rose to $28.73 yesterday, a 24 A cents increase, following the sale of its two Irish banks. Investors focused on the impact on dividends and capital strength, rather than a lost opportunity in a fast-growing European market. The $2.5 billion price tag for the banks was seen as top of the range, with the buyer, Danske Bank, experiencing a 5% drop in its share price due to concerns it had paid too much.

Key Takeaways:

• National Australia Bank shares rose 24 A cents to $28.73 after the sale of its two Irish banks, reflecting a positive view on the deal's impact on dividends and capital strength.
• Deutsche Bank upgraded the bank's rating to "hold" from "sell", citing the sale as an important step in the bank's recovery, providing capital for restructuring and comfort around dividend sustainability.
• Citigroup increased its target price to $29 from $27, citing the bank's increased ability to sustain its dividend and flexibility to clean up its balance sheet.
• Credit Suisse First Boston described the deal as "incremental positive" but not transforming, due to ongoing cost pressures, capital constraints, and restructuring risks.
• Goldman Sachs JB Were upgraded its short-term recommendation from "underperform" to "market perform" and long-term recommendation from "hold" to "buy", citing positive news flow, potential earnings benefits, and capacity to redeploy or buy back capital.
• Standard & Poor's Rating Services stated that the sale had no impact on its "AA minus" ratings.

Statistics:

• National Australia Bank shares increased by 24 A cents to $28.73.
• The $2.5 billion price tag for the Irish banks was considered top of the range.
• Danske Bank's share price dropped by 5% after acquiring the Irish banks.
• Citigroup's target price for National Australia Bank was increased from $27 to $29.
• Goldman Sachs JB Were upgraded its short-term recommendation from "underperform" to "market perform".

Sources:

• Deutsche Bank
• Citigroup
• Credit Suisse First Boston
• Goldman Sachs JB Were
• Standard & Poor's Rating Services
• European Wall Street Journal