The result of the sale is expected to be a small gain in the lender’s first-half results, with an estimated £127 million of capital to be released for NAB Group when the transaction is settled.

At the conclusion of the sale, the balance of NAB’s CRE portfolio will be reduced to £836m, a significantly lower number than £5.6bn in October 2012, when the run-off portfolio was first established.

NAB (NAB) said the loans being sold are largely defaulted, watch and high loan-to-value loans, with the sale reducing the higher risk loans in the portfolio by 93 per cent.

NAB chief executive Andrew Thorburn said the transaction is a critical step forward for the lender, bringing closure to one of its legacy positions.

“The sale of these higher risk loans in the NAB UK CRE portfolio is another important milestone in our strategy of reducing our low returning legacy assets and sharpening our focus on our core Australian and New Zealand franchises,” he said.

“Pleasingly, the remaining NAB UK CRE loans are largely strong performing loans, and we will look at other options to manage this small remaining portfolio.”

Business Spectator