National Australia Bank CEO Clyne quits, Thorburn takes reins

* Head (Other OTC: HEDYY - news) of Bank of NZ unit Andrew Thorburn to take over

* Clyne to quit executive life, spend time with family

* NAB has underperformed rivals in Clyne's 5-yr tenure (Adds quotes, detail on earnings, share performance)

SYDNEY, April 3 (Reuters) - Cameron Clyne, the chief executive of National Australia Bank Ltd, announced his surprise retirement on Thursday, giving way to the head of the group's New Zealand operations, Andrew Thorburn.

NAB is the largest of Australia's "Big Four" banks by assets but the smallest by market capitalisation and while it has enjoyed strong earnings and share growth, it has underperformed its rivals since Clyne, 46, took over the reins five years ago.

Thorburn, a former executive at rival Commonwealth Bank of Australia who joined NAB in 2005, will take over when Clyne steps down on Aug. 1, NAB Chairman Michael Chaney said in a statement.

"Cameron took over as CEO during the global financial crisis and developed an effective strategy to steer the bank through a challenging period during which it has undergone significant cultural and structural change," Chaney said.

NAB and its rivals - CBA, Australia and New Zealand Banking Group and Westpac Banking Corp - all negotiated the crisis much better than most of their global rivals, helped by a focus on plain vanilla mortgages and business lending.

But NAB's profits have lagged its peers due largely to its poorly performing UK operations.

Clyne said the job had taken a personal toll and it was time to retire from executive life.

"I am leaving to spend some much-needed time with my young family," Clyne said.

Thorburn, a 27-year banking veteran, has boosted Bank of New Zealand's cash earnings by more than 40 percent since he took over in 2008, Chaney said.

NAB posted a record first quarter cash profit of A$1.55 billion ($1.43 billion) for the three months to Dec. 31, helped by a fall in bad and doubtful debts.

NAB shares have gained about two-thirds in five years, lagging a more than doubling by CBA and ANZ and a 75 percent rise by Westpac.

($1 = 1.0822 Australian Dollars) (Reporting by Lincoln Feast, editing by Dean Yates)