National Sells Parcel of HomeSide's Mortgage Servicing Rights - 4 June 2002

National Australia Bank today announced the sale of mortgage servicing rights in respect of approximately US$13.3 billion of mortgages. The sale is about 8 per cent of the total portfolio of approximately US$162 billion.

The parcel was sold via a competitive process. Terms of the sale restrict disclosure of the sale price and identity of the purchaser.

National's Chief Financial Officer, Richard McKinnon said: "After allowance for all sale costs, the sale price for the portfolio represents a small premium to the National's valuation. The sale price was supported by independent advice from Cohane Rafferty, LLC.

HomeSide's hedging activities remain effective and have incorporated the impact of the sale.

It is anticipated the sale will improve the National's Tier 1 capital ratio by approximately 0.02%.

"This sale confirms the return of interest in the market for bulk purchases of MSR and that HomeSide is committed to the sale of all or parts of its servicing portfolio at fair value," Mr McKinnon said.

"The completion of the sale of the HomeSide operating platform to Washington Mutual at the end of February this year provided the flexibility to negotiate this transaction," he said.

The sale proceeds will be used to retire debt.