Besieged NAB finds forex 'gaps'
 |
Beseiged NAB boss Frank Cicutto faces ASIC investigation.
Story Tools
YOUR E-MAIL ALERTS
|
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.
Or, visit Popular Alerts for suggestions.
|
|
MELBOURNE, Australia -- National Australia Bank Ltd says it has found gaps in its internal procedures that had allowed currency options traders to breach trading limits and lose at least A$185 million ($145 million).
"The foreign currency options traders exploited weaknesses in our internal procedures," Chief Executive Frank Cicutto said in a statement on Friday, according to Reuters news agency reports.
"We have identified those weaknesses and have closed them."
The bank had hoped to complete the revaluation of its currency options portfolio this week, but said the process was complex. It expects to announce the results next week.
Earlier, troubles deepened for crisis-plagued National Australia Bank with the launch of a formal investigation into its foreign exchange trading activities.
The Australian Securities and Investments Commission (ASIC) confirmed it has started a probe into whether there have been "any contraventions of the Corporations Act by employees of National Australia Bank (NAB) involved in foreign exchange options trading."
However Australian stock investors responded positively to the news.
By late afternoon trading on the Australian Stock Exchange Friday, the stock had moved 0.14 percent into positive territory on a day when most banks were making gains. NAB stood at A$29.58.
The NAB, which has lost less than 1 percent of its capital value since the forex scandal erupted, is one of Australia's so-called "Big Four" banks.
With total assets valued at A$397 billion, it owns Britain's Yorkshire Bank, Clydesdale Bank, Pivotal, Northern Bank, as well as the National Irish Bank.
Assets in Asia cover Hong Kong and Indonesia, plus New Zealand.
ASIC has also advised it is inquiring into whether the NAB has properly informed the market about this matter and its consequences.
The bank is obliged to tell the market of any events that could have an impact on its share price.
Revelations that four of the bank's foreign exchange traders had lost at least A$185 million on rogue trades resulted in a share price slump of more than 6 per cent before bouncing back this week.
NAB has since said that the losses from a series of disastrous deals could be as high as A$600 million, leading to speculation that it actually does not know the extent of the loss.
ASIC said it its statement it is not commenting beyond confirmation of the investigation.
The commission has the power to seize any documents it believes will shed light on the controversy.
Four NAB traders -- three in Melbourne and one in London -- have been suspended.
National broadcaster, the Australian Broadcasting Corporation, alleged Thursday that one trader had been paid a A$200,000 bonus just days before the extent of the loss was revealed.
