ASX Announcement - Securities and Exchange Commission Request - 26 February 2004

The National has received a voluntary information request from the Securities and Exchange Commission (SEC) in the United States as part of an investigation into certain Australian registrants and public accounting firms.

The document request covers the National Group and subsidiaries and includes issues relating to audit independence. In addition, the National has been asked for information about the accounting and internal controls of the National and its subsidiaries for the last three financial years, including the foreign currency options trading matter and HomeSide. The National is fully co-operating with the SEC request.

The SEC request in relation to audit independence issues follows an internal review by the National that confirmed five seconded employees of the company's auditor, KPMG, had provided certain non-audit services to the bank in Australia at different times between 2000 and 2003 thereby raising concerns about compliance with US regulations. These services were immediately discontinued.

The National has been advised that the services by KPMG employees were not in breach of independence regulations in Australia, New Zealand or the United Kingdom.  The Institute of Chartered Accountants in Australia (ICAA) has also advised KPMG that the services it provided did not impair their independence under Australian Professional Standards. SEC rules differ to the requirements in Australia, New Zealand and the United Kingdom.

The Chief Financial Officer, Mr Richard McKinnon, said this matter had been brought to the attention of the Board Audit Committee, and subsequently discussed with Australian and US regulators.

"KPMG brought this matter to the attention of the National," Mr McKinnon said. "We acted quickly to review the matter and provide the conclusions of our review to the SEC for consideration.

"KPMG has confirmed their independence under Australian requirements for the purposes of our Australian accounts and we do not believe that the provision of these services will disqualify KPMG from acting as the National's external auditor for the purpose of its US filings."

Mr McKinnon said the National's annual 20-F filing in the US was largely complete but that some matters remained to be finalised.

"As soon as these matters are finalised, we will lodge our annual 20-F filing with the SEC in the US," Mr McKinnon said. "We will lodge by the statutory deadline of 31 March 2004."

For further information:

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Brandon Phillips     
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Callum Davidson
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