The ratings on National Australia Bank Ltd. (The National) reflect the bank's diversified core business base, strong domestic market position, acceptable asset quality, and adequate core underlying profitability. The National experienced a significant negative event in the form of a A$3.6 billion write-down against goodwill and its mortgage servicing right asset (MSR) as a result of the revaluation of the MSR asset of Homeside Lending Inc. to a market sale value, and an incorrect interest rate assumption. However, this was more than offset by the sale during fiscal 2001 of Michigan National Corp. Although the risk-management error that occurred in connection with Homeside appears to be specific to that entity, risk management remains a key rating sensitivity for the bank
