News: NAB UPDATE 1-National Australia Bank's capital notes offer raised to $1.29 bln

(Adds background on capital requirements, details of capital notes offer)

Feb 24 (Reuters) - National Australia Bank (NAB) announced on Monday it would increase the amount it was looking to raise from a notes offer to at least A$1.95 billion ($1.29 billion) and said it may be pushed up further.

The country's third-largest lender had initially sought to raise at least A$750 million through the capital notes offer to refinance existing notes.

NAB has struggled to meet the new common equity tier 1 (CET1) minimum regulatory requirement of 10.5%, which prompted a cut in its dividend. The ratio, a closely watched measure of the bank's spare cash, eventually increased to 10.6% at the end of December from three months earlier.

Australian banks have been beefing up their capitals levels to meet tougher requirements, as they also compensate aggrieved customers for past wrongdoings exposed in an inquiry last year.

NAB said the capital notes will have a margin of 2.95% a year, the lower-end of its indicative 2.95% - 3.15% range.

Commonwealth Bank of Australia (CBA) , the country's largest lender, issued capital notes late last year to raise A$1.25 billion at a margin of 3%.

NAB's offer will open on Feb. 25 and close on March 17. ($1 = 1.5090 Australian dollars)