The Australian Prudential Regulation Authority warned National Australia Bank in February 2008 that it had been slow in recognising provisions against conduit assets and failed in its basic credit analysis. NAB held a A$1.2 billion portfolio of collateralised debt obligations backed by US sub-prime mortgages, which it had been investing in since 2006. The bank booked a loss of more than $1 billion on that holding later in 2008 - a decision that caused the bank's stock price to fall sharply. A group of investors is suing NAB for money they lost in the share price collapse, claiming that NAB should have disclosed its exposure to the risky assets earlier in 2008. APRA's assessment of the bank's credit management was revealed in documents presented in the Victorian Supreme Court yesterday. According to a report in The Australian, NAB group chief risk officer Michael Hamar said in an email dated February 11, 2008, that APRA "made it clear that… we have failed in our basic credit analysis here and have been almost totally reliant on ratings and on managers' reports." The investors claim that the bank misrepresented a $181 million provision against the CDOs in May 2008 as "very conservative", only two months before increasing the provision to $1.1 billion. The US sub-prime market started running into trouble in 2007. According to the Australian Financial Review, in January 2008 nabCapital's then head of securitisation, Emmanuel Arabatzis, wrote to staff: "On reviewing the files, APRA expressed some concerns at the lack of information held by credit." In February, the then head of global credit at nabCaital, Carmine Veltro, wrote to staff: "With regard to re-rates, we need to take immediate action. The feedback from APRA is that we are too slow and overly-optimistic with our ratings."