Moody’s assigns Aa3 rating to NAB’s USD600m Perpetual Capital Notes

Sydney, September 24, 2009 -- Moody's Investors Service has assigned a 
rating of Aa3 to National Australia Bank's (NAB) USD600 million Perpetual 
Capital Notes, issued through its New York branch. The rating outlook is 
negative.

"The Aa3 rating is 2 notches lower than NAB's senior unsecured debt
rating of Aa1, and reflects the structure of the securities, which 
qualify as Tier 1 capital", said Patrick Winsbury, a Senior Vice 
President with Moody's Sydney office. "Key features driving the rating 
outcome are the fact that interest is subject to payment tests and 
non-cumulative, and in case of a winding up of NAB, the amount owing to a 
Perpetual Capital Note holder would be equal to the amount it would have 
received if it had held an issued and fully paid preference share."

The negative outlook on the Aa3 rating of the Perpetual Capital Notes is 
in line with that on the bank's other long-term ratings, and reflects the 
ongoing impact of the global financial crisis on asset quality and 
earnings.

The rating for the Perpetual Capital Notes was assigned in line with 
Moody's existing methodology entitled "Guidelines for Rating Bank Junior
Securities", dated April 2007. Moody's noted that it has subsequently 
released a Request for Comment entitled "Moody's Proposed Changes to Bank 
Subordinated Capital Ratings" in June 2009, in which the rating agency 
has requested market feedback on potential changes to its rating 
methodology for bank junior securities, such as NAB's Perpetual Capital 
Notes. Should the revised methodology be implemented as proposed, the 
rating on NAB's Perpetual Capital Notes could potentially be negatively 
affected.

The last rating action on NAB was to revise its outlook to negative from
stable on 1 August 2008. Additionally, Moody's commented on 12 May 2009 
that there was no impact on NAB's ratings from the downgrade of its UK 
subsidiary Clydesdale Bank, and on 23 June 2009 that there was no rating 
impact from NAB's purchase of Aviva Australia Holdings' wealth management 
business.