NAB Convertible Preference Shares II (NAB CPS II) are fully paid preference shares that were issued directly by NAB on 17 December 2013 and listed on the ASX under the code NABPB. The issue price for NAB CPS II was $100 per NAB CPS II. Note they are not guaranteed or secured and are not a deposit account or any other account with NAB.
NAB CPS II are expected to pay a discretionary, quarterly, floating rate, non-cumulative Dividend. The Dividend Rate is equal to the sum of the Bank Bill Rate and a margin of 3.25%, adjusted for NAB’s Tax Rate1 to reflect franking credits attached to each Dividend (subject to availability)2. Dividends are expected to be franked at the same rate as dividends paid on NAB’s Ordinary Shares. However, franking is not guaranteed. The extent to which Dividends will be franked will depend on a number of factors, including the Group’s capital management plan and the level of profits generated by the Group that will be subject to tax in Australia.
On 5 November 2020, NAB issued a redemption notice in respect of NAB CPS II, in accordance with their terms. That notice confirms that on 17 December 2020, all NAB CPS II on issue will be redeemed. The NAB CPS II forms part of NAB’s share capital and accordingly it is expected that the redemption will be substantially by way of a reduction of capital, with the balance by way of redemption, upon which all NAB CPS II will be cancelled. Holders will receive proceeds of $100 per NAB CPS II.
The redemption notice is irrevocable, except as provided in the NAB CPS II terms. The redemption may not occur for a number of reasons, including if a loss absorption event occurs or APRA revokes its approval. If the redemption does not occur, except where a loss absorption event occurs, holders will continue to hold NAB CPS II and will have no right to require NAB to convert NAB CPS II into Ordinary Shares, or to redeem or resell NAB CPS II. Without a conversion, redemption or resale, in order to realise their investment, holders would have to sell their NAB CPS II on the ASX at the prevailing market price.
Subject to satisfaction of the Dividend payment conditions in the terms, it is expected that a final Dividend will be paid by NAB of $0.5829 per NAB CPS II on 17 December 2020.
A general outline of the taxation implications for certain holders of NAB CPS II who are Australian residents for tax purposes can be found in the Australian Taxation Summary in the NAB CPS II Prospectus. The taxation implications depend on your individual circumstances.
For more information on NAB CPS II please refer to:
- NAB Convertible Preference Shares II payment history and relevant ASX announcements
- NAB Convertible Preference Shares II - Redemption Notice
- Replacement Prospectus – NAB Convertible Preference Share II Offer (PDF, 1.69MB)
- Financial Services Guide (PDF, 2.63MB)
- ATO Class Ruling (PDF, 610KB)