ASX Announcement - Update on National Australia Bank CDO Portfolio

Friday, 11 July 2008

As disclosed at 31 March 2008, the Group has an exposure of US$1.1 billion to collateral debt obligations (CDOs) via the provision of liquidity lines to conduit financing vehicles.

Given the uncertain economic environment and rating downgrades, a collective provision of $181 million was established at 31 March 2008 in respect of this exposure. Since that time the economic environment has deteriorated further.

These exposures are being actively managed to minimise the potential for loss. However, notwithstanding that these CDOs are currently meeting all principal and interest obligations, there continues to be a risk that further provisioning may be required.

This disclosure is being made as a requirement of National Australia Bank’s underwriting agreement for the Dividend Reinvestment Plan.

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