National Bank of Canada Announces Preferred Share Offering

Montreal, 22 January 2009 - 

National Bank of Canada (“National Bank”) today announced that it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. for an issue on a bought deal basis of 4 million non-cumulative 5-year rate reset first preferred shares series 26 (the “Series 26 Preferred Shares”), at a price of $25.00 per share, to raise gross proceeds of $100 million.

National Bank has also granted the underwriters an option to purchase, on the same terms, up to an additional 3 million Series 26 Preferred Shares. This option is exercisable in whole or in part by the underwriters at any time up to one business day prior to closing. The maximum gross proceeds raised under the offering will be $175 million should this option be exercised in full.

The Series 26 Preferred Shares will yield 6.60% annually, payable quarterly, as and when declared by the Board of Directors of National Bank, for the initial period ending February 15, 2014. The first of such dividends, if declared, shall be payable on May 15, 2009. Thereafter, the dividend rate will reset every five years at a level of 479 basis points over the then 5-year Government of Canada bond yield.

Holders of the Series 26 Preferred Shares will have the right to convert their shares into an equal number of non-cumulative floating rate first preferred shares series 27 (the “Series 27 Preferred Shares”), subject to certain conditions, on February 15, 2014, and on February 15th every five years thereafter. Holders of the Series 27 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of National Bank, equal to the 90-day Government of Canada Treasury Bill rate plus 479 basis points.

The net proceeds of the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for National Bank. The expected closing date is on or about January 30, 2009. National Bank intends to file in Canada a prospectus supplement to its December 5, 2008 base shelf prospectus in respect of this issue.

National Bank will make an application to list the Series 26 Preferred Shares and the Series 27 Preferred Shares as of the closing date on the Toronto Stock Exchange.

The Series 26 Preferred Shares and Series 27 Preferred Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or under any state securities laws, and may not be offered, sold, directly or indirectly, or delivered within the United States of America and its territories and possessions or to, or for the account or benefit of, United States persons except in certain transactions exempt from the registration requirements of such Act. This press release shall not constitute an offer to sell or a solicitation to buy securities in the United States.

About National Bank of Canada
National Bank of Canada is an integrated group which provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its clients elsewhere in the world. The National Bank offers a full array of banking services, including retail, corporate and investment banking. It is an active player on international capital markets and, through its subsidiaries, is involved in securities brokerage, insurance and wealth management as well as mutual fund and retirement plan management. National Bank has more than $129 billion in assets and, together with its subsidiaries, employs 17,146 people. The Bank’s securities are listed on the Toronto Stock Exchange (NA:TSX). For more information, visit the Bank’s website at www.nbc.ca.

Information (The telephone number provided below is for the exclusive use of journalists and other media representatives.):

Denis Dubé
Director – Public Relations
National Bank Financial Group
Tel.: 514-394-8644