(MENAFN- AFP) National Australia Bank has agreed to pay Aus$115 million (US$119 million) to settle a class action brought by shareholders over the lender's exposure to toxic US mortgage assets.
The proceedings commenced in November 2010 over losses suffered as a result of the bank's exposure to collateralised debt obligations (CDOs) heavily exposed to the US subprime residential mortgage market.
The US mortgage market became toxic in 2007 and early 2008, sparking the global financial crisis.
According to law firm Maurice Blackburn, which is leading the class action, it led to a plunge in the bank's share price when it was revealed that NAB had lost up to Aus$1.0 billion in the American mortgage crisis.
"This settlement provides redress for thousands of shareholders who, the plaintiffs alleged, suffered losses as a result of NAB's conduct," said Jacob Varghese, principal lawyer on the class action.
"It once again reminds public companies of their duty to keep shareholders informed."
One of the lead plaintiffs was George Vlachos, who invested in NAB shares between January and May 2008 and lost more than Aus$3,000 when the stock price plunged on July 25, 2008.
"It was important to me that shareholders take a stand for the principle of continuous disclosure," he said.
"Class actions like this send a powerful message that companies have to keep us informed of what is going on in their business."
NAB, Australia's fourth biggest lender, had previously vowed to vigorously defend the action, which was brought by more than 15,000 investors, but decided to settle.
"The settlement of the class action is a purely commercial decision made in the interests of our shareholders," said NAB company secretary Michaela Healey.
"We are pleased to put this matter behind us so that we can continue to focus on improving returns for our shareholders without the distraction and significant expense of a lengthy trial."
The bank agreed to pay Aus$85 million in the settlement, plus an allowance for interest and costs, which took the total to Aus$115 million.
Those costs will be covered by insurance and existing provisions, and therefore would have an immaterial impact on NAB's earnings in the current fiscal year, the bank added.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.