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NAB defends itself in class action
NAB will vigorously defend itself in a class action that claims the bank failed to disclose the full extent of losses during the global financial crisis early enough, its lawyer says.
The New Lawyer
NATIONAL Australia Bank will vigorously defend itself in a class action that claims the bank failed to disclose the full extent of losses during the global financial crisis early enough, its lawyer says.
Maurice Blackburn Lawyers is heading the action by 250 institutional and retail investors seeking about $450 million in losses. Maurice Blackburn principal Andrew Watson told a directions hearing at the Victorian Supreme Court on Friday that the bank should have revealed information to shareholders earlier. Maurice Blackburn was contacted by shareholders following a $6 per share plunge in the bank's share price in July 2008, the firm said. According to the firm, NAB had bought $1.2 billion in Collaterised Debt Obligations (CDOs) in 2006 which comprised asset-backed securities, in particular US residential mortgage backed securities. It alleges that these CDOs had a heavy exposure to the sub prime residential mortgage market which became "toxic debt" in 2007 and early 2008. A lawyer acting for NAB, Geoff Healy, said outside the court on Friday that it was still waiting to see a statement of claim from Maurice Blackburn. “We will be vigorously defending the case,” he said to reporters. Justice Tony Pagone adjourned the matter on Friday for a further preliminary hearing on 28 March. In late July 2008 NAB suffered the biggest drop in its share price since 1987, when the bank revealed it had lost up to $1b in the US mortgage crisis. "We will allege that between 1 January 2008 and 25 July 2008 NAB did not properly disclose to shareholders and potential shareholders all material information relating to its CDO exposure. Shareholders who bought shares before NAB revealed its true position suffered losses as a result." said Watson. "In early May 2008, the NAB told the market that it had provisioned $181 million, in respect of its $1.2 billion CDO exposure. The bank announced at the same time that this was a very conservative provision. Investors took comfort from this apparently conservative and appropriate approach. “However only two months later, in July 2008, NAB increased its total provision to $1.1 billion, or 90 per cent of the value of the CDOs. In the following days NAB's share price plunged by nearly $6 and analysts complained strongly about the misleading nature of NAB's earlier announcement."
the law firm said.
