NAB agrees to settlement worth $115m

National Australia Bank has agreed to pay around $115 million to settle a case brought against it by shareholders.

Legal action was taken by a group of investors who acquired NAB shares between January 1 and July 24 in 2008 and related to the level of disclosure surrounding NAB's exposure to certain financial derivatives.

In a one-page statement, NAB says it has agreed to pay the claimants $85 million plus an allowance in respect of interests and costs to settle the class action.

Maurice Blackburn, the law firm representing the litigants, says the total payment from NAB including interest and costs is $115 million.

It says the class action was brought against the bank by more than 15,000 shareholders who lost money when NAB suffered its biggest share price drop in more than 20 years after revealing on July 25 2008 that it had lost up to $1 billion in the US subprime mortgage crisis.

Investors claimed that the bank failed in its disclosure duties by not informing them of the US exposure earlier.

The bank says $50 million of the payment is comprised of available insurance proceeds and the rest has already largely been written off, meaning the settlement will have no material impact on its bottom line.

NAB says the settlement contains no admission of liability by the bank.

"We have always said we would vigorously defend the class action and we remain confident about our legal position in the proceedings," said NAB company secretary Michaela Healey.

"The settlement of the class action is a purely commercial decision made in the interests of our shareholders.

"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 settlement is subject to the approval of the Victorian Supreme Court.

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