ASX Announcement - National Australia Bank hybrid Tier 1 capital issue

Further to an announcement on 15 September 2006, National Australia Bank today announced an issue of Euro 400 million hybrid Tier 1 National Capital Instruments ("NCIs").

The NCIs carry a floating distribution at a rate of 0.95% over 3 month EURIBOR, from 29 September 2006 up to but not including 29 September 2016 (the "Step-Up Date"), and from the Step-Up Date at a rate of 1.95% over 3 month EURIBOR.  The perpetual securities are redeemable by the National on the occurrence of certain events, on the Step-Up Date and on any distribution payment date on the NCIs thereafter, subject to the prior written approval of APRA.

National Australia Bank Finance Director, Mr Michael Ullmer, said that the deal was supported by a large number of European institutional investors.  This issue of Tier 1 securities provides the National with capital flexibility, and reinforces its relationships with this important investor base.

This issue of hybrid Tier 1 capital is consistent with the National's objective of efficient capital management and is part of National's ongoing capital management strategy.  The proceeds from the Tier 1 issue will be used for general business purposes.

For further information:

Brandon Phillips
Group Manager, External Relations
T  03 8641 3857
M  0419 369 058

Hany Messieh
Head of Investor Relations
T  03 8641 2312
M  0414 446 876

This statement does not constitute an offer of any securities for sale.  The securities offered will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.