National Australia Bank
National Australia Bank (abbreviated NAB, branded nab) is one of the four largest financial institutions in Australia (colloquially referred to as "The Big Four") in terms of market capitalisation, earnings and customers.[3][4] NAB was ranked the world's 21st-largest bank measured by market capitalisation[5] and 52nd-largest bank in the world as measured by total assets in 2019.[6]
For other uses, see National Australia Bank (disambiguation).Company type
- ASX: NAB
- S&P/ASX 200 component
1 October 1981 (as National Commercial Banking Corporation of Australia Limited)
395 Bourke Street
Melbourne, Australia
Australia
- Andrew Irvine (CEO)
- Philip Chronican (Chairman)
A$ 7.414 billion (2023)[2]
A$ 1,059.08 billion (2023)[2]
38,128 (2023)[2]
As of January 2019, NAB operated 3,500 Bank@Post locations—including 7,000+ ATMs across Australia, New Zealand, and Asia—and served 9 million customers.[7]
NAB has an "AA−" long-term issuer rating by Standard & Poor's.[8]
Controversies[edit]
Foreign currency trader staff fraud[edit]
In 2004, NAB discovered that as a result of unauthorised spot trades on its foreign currency options desk, losses totalling A$360 million had been covered up. Investigations by PricewaterhouseCoopers and the Australian Prudential Regulation Authority highlighted a need for cultural change. The losses were a result of a failed speculative position where the traders falsified profits to trigger bonuses over a number of years. In order to actually generate the reported profits, the traders speculated on the US dollar, betting that it would rise against the Australian dollar and other currencies. In 2006, two former NAB foreign currency options traders were sentenced on charges brought by the Australian Securities and Investments Commission (ASIC) and incurred jail terms.[94]
Financial planner misconduct[edit]
Acting on a customer complaint, an Australian Securities & Investment Commission (ASIC) investigation found that between 1997 and 2001, a NAB financial products seller, Paul Drakos, working out of a northern Sydney branch at Hornsby made recommendations to a number of NAB clients, mostly retirees, to invest in BSI Corp,[95] an entity based in the Bahamas which was not a NAB approved investment product. According to ASIC, at least $6.2m was subsequently transferred from the overseas accounts in the Bahamas and the Dominican Republic back to a private company account, held for Strategic Investments Group ACN 080 924 036 and controlled by a single director, the same Paul Drakos. Funds were then applied from this account as loans disguised as investments to a number of failed business opportunities among his familial associates including a golf driving range on the Central Coast of NSW, a plumbing business, and futures and commodities trading. The land holdings, as inflated securities,[96] were also used by the failed Allco Hit.[97] The NAB employee was not officially connected with BSI but gave instructions to agents based in Canada to arrange for the transfer of funds back to Strategic Investments Group and other accounts. On 29 May 2006 the NAB employee pleaded guilty to 8 counts of dishonestly obtaining a financial advantage by deception, 2 counts of fraudulent misappropriation and 3 counts of making and using false documents. There is also a connection, not yet pursued by ASIC, to the collapse of the Allco HIT Ltd and Strategic Finances where it is suspected that the swampland was used to underpin financial dealings. During the time of the investigations the NAB provided the perpetrator of the fraud with a loan of $350,000 secured by swampland on the Central Coast of NSW.[98]
Ex-Chief of Staff and accomplice defraud NAB[edit]
More than $5.5 million in inflated invoices from an event and function company Human Group were paid between 2014 and 2017 to Rosemary Rogers an NAB employee for more than twenty years, nine of which was as chief of staff to CEOs Cameron Clyne and Andrew Thorburn. The money was paid by a co-accused Helen Rosamond "as an inducement or reward to ensure that Human Group maintained a contract with NAB" according to court documents. The court was told by the prosecution Rogers was motivated by "greed, personal gain and self-gratification". In sentencing, Judge Paul Conlon said the benefits she received went "well beyond compensating family for any perceived neglect", and went onto say, "I find it absolutely staggering that this fraud were not detected by some appropriate system of internal auditing by NAB". An anonymous whistle-blower sent a letter to NAB executives in 2017, alleging "Rose" had been receiving money and gifts over a number of years from Ms Rosamond. In sentencing, Rogers is to serve at least four years and nine months of her sentence being eligible for parole in October, 2025. Her co-accused is yet to be sentenced.[99]
Tax evasion and customer overcharging in Ireland[edit]
The Irish subsidiary of the bank, National Irish Bank was the subject of a six-year Inquiry carried out by Inspectors appointed by the Irish High Court. They established that National Irish Bank had engaged in overcharging its own customers and tax evasion schemes prior to 1998.[100] Mr Justice Peter Kelly, an Irish High Court judge commented following publication of the Report "The edifice of banking is built on a foundation of trust. On the Inspectors findings there was a breach of trust. The operation was carried out over a period of years in a deliberate fashion".[101] The Director of Corporate Enforcement subsequently applied to the High Court to have 9 senior managers barred from being an officer of any company.[102]
HomeSide write-downs[edit]
NAB booked two write-downs associated with HomeSide. First, in July 2001, NAB had a $450 million write down of the value of its capitalised mortgage servicing rights (CMSRs) during the quarter ending 30 June 2001, and was the result of exceptionally high mortgage refinance volumes which lowered the value of the CMSRs, combined with a more challenging capital markets environment in which to hedge interest rate risk.[103] This was followed shortly by a second write-down reported in September totalling $1.75 billion; this second write-down consisted of US$400 million from an incorrect interest rate assumption embedded in the mortgage servicing rights valuation model, US$760 million from changed assumptions in the model flowing from the continued unprecedented uncertainty and turbulence in the mortgage servicing market, and US$590 million from writing off of the goodwill. In total, NAB booked $2.2 billion in losses due to HomeSide.
As a result of all these events, NAB's Australian shareholders attempted to sue it in the United States for securities fraud, even though the plaintiffs, the defendant, and the actual securities at issue (NAB's shares) were all located in Australia. (The main advantage of suing in the U.S. arises from Basic Inc. v. Levinson (1988), under which it is presumed that the defendant committed "fraud-on-the-market" unless the defendant proves otherwise.) The case of Morrison v. National Australia Bank Ltd ultimately ended up before the U.S. Supreme Court, which held in a unanimous 8–0 decision on 24 June 2010 that U.S. law against securities fraud does not apply to securities deals occurring outside of the country.