Contact l Sitemap

home industries issues reasearch weblog press

Home  » Issues » Money & Politics

Australia: Watchdog Condemns NAB

March 24th, 2004

Australia's financial watchdog has said the country's biggest bank put profit before probity, leading to a US$184m (102m) currency trading scandal.

National Australia Bank "failed at every level" to implement proper controls on risk management, the regulator said.

The inquiry by Australian Prudential Regulation Authority's report is the second to condemn lax controls at NAB.

NAB has tried to root out the problem by sacking eight managers and traders.

APRA said the bank's board had paid lip service to the importance of internal controls but failed to act on its pledges.

'Profit is king'

"Despite often asserting that risk issues were of such importance that they should be dealt with by the full board, the board paid insufficient attention to risk issues," the APRA found.

Instead, the bank suffered from a profits-first culture which led line managers to neglect internal controls and known risk management concerns.

"'Profit is king' was an expression frequently heard in our interviews with corporate and institutional banking staff," the report said.

The bank itself commissioned a previous report by PricewaterhouseCoopers which found that traders exploited loopholes in the bank's systems to conceal heavy losses, which were only uncovered after junior employees raised concerns.

It argued that NAB had insufficient systems in place to supervise traders and deal with mistakes when they arose.

The bank's chairman and chief executive stood down after the rogue trades came to light.

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.