NAB considers options on equity

National Australia Bank is looking at selling between $2 billion and $3 billion of new shares to fund its two mooted takeovers, the Financial Review reported.

The two takeovers are of the Australian and New Zealand business of Axa Asia Pacific and a portfolio of branches of Royal Bank of Scotland in Britain.

NAB may not need to sell any new capital were it to be successful in its bid for only one of these two assets, the newspaper reported, largely because the bank's shrinking loan book (reflecting weak demand for business loans) was lifting capital ratios.

The bank said in December when announcing the bid for Axa AP that it planned to sell $1.5 billion in new shares to help fund the bid.

The newspaper reported its NAB contacts scotching speculation in British newspapers early this week that the bank might drop out of bidding for the RBS branches. Bids are due in the first week of April.

There is some speculation in British media that RBS may defer the sale of the branches (which it is only doing to meet demands from the European Union) if offers are too low.