The National Australia Bank Ltd (ASX: NAB) share price will be one to watch closely today.
This follows the release of an announcement after the market close on Tuesday.
Why is the NAB share price on watch?
Late yesterday afternoon the banking giant confirmed speculation that it interested in acquiring the Australian Consumer business of Citigroup.
NAB commented: “Following media speculation, NAB confirms it is in discussions with Citigroup about the potential acquisition of its Australian Consumer business. NAB regularly assesses opportunities to acquire businesses that support its growth strategy in core banking markets.”
However, the big four bank has warned the market that there is no certainty these discussions will lead to a transaction. It will update the market further if and when appropriate.
How close is a deal?
According to the AFR, a $2 billion deal could be a lot closer to being sealed than NAB is leading on.
It is reporting that NAB has appointed Bank of America to help it secure the business, through an auction that is understood to be in the final stages. And, importantly, NAB is emerging as a frontrunner in the auction.
This deal has the potential to be a positive for the NAB share price. The banking giant reportedly believes it will help grow its retail book and is attracted to Citi’s expertise in unsecured lending. It also notes that it would be aligned with NAB CEO Ross McEwan’s simple and digital strategy, with some 90% of its 1 million customers coming to the lender through digital channels.
The report suggests the deal would add $11.5 billion in total residential loans and finance leases in Australia to NAB’s books. This includes $6.6 billion in housing loans and $3.6 billion in credit cards.
The NAB share price is up a sizeable 14.5% since the start of the year.