CDO provision concerns for National Australia Bank

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Australia's most profitable bank has signalled deepening concern about the impact of the global credit crisis on its earnings.

Like its other major bank peers in Australia, National Australia Bank is recognised as having a far more limited exposure to the ructions on global capital markets than US and European institutions.

However, in March it revealed it had a portfolio of $US1.1 billion in so-called collateral debt obligations.

At the time, it said it was setting aside $180 million for potential losses.

Now it says the economic environment has deteriorated further and there's a risk that further provisioning will be needed.

At the same time, National Australia Bank has announced it's in talks to possibly buy the Australian and New Zealand operations of ABN Amro.