Australia's NAB announces $4.4 bln rights issue; to float UK unit

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SYDNEY, May 7 (Reuters) - National Australia Bank, the country's top lender by assets, on Thursday reported a 5.4 percent rise in first-half cash earnings, meeting forecasts, and announced a A$5.5 billion ($4.38 billion) rights issue as it looks to demerge and float its troubled British unit.

The 2-for-25 rights shares will be issued at a A$28.5 each, a 25 percent discount to Wednesday's closing price.

Its UK business, which includes Yorkshire and Clydesdale bank branches, has been a persistent thorn in its side, with charges for bad and doubtful debt responsible for annual profit declines four times since 2008.

Following the capital raising, NAB's pro forma cash earnings per share, diluted for the March 2015 half year, is expected to be approximately 4.5 percent lower and pro forma cash earnings return on equity for the same period is expected to be 1.4 percent lower.

($1 = 1.2545 Australian dollars) (Reporting by Swati Pandey; Editing by Cynthia Osterman)