NAB revises FX options losses to A$360 million
National Australia Bank (NAB) has revised its pre-tax losses arising from unauthorised foreign exchange options trading to A$360 million ($277.4 million), double last week’s initial estimate.
“We have worked as quickly as possible to identify all of the losses arising from the foreign currency options trading accurately,” said NAB chief executive Frank Cicutto, adding that an external auditor had confirmed the revaluation of the trading portfolio. “We will ensure that our ongoing position will be managed in a prudent and conservative manner.”
Last week, Cicutto admitted that four forex options traders had exploited “weaknesses” in the bank’s internal procedures, adding that these flaws had now been eliminated. The bank is currently conducting a full investigation into the unauthorised trades, which centred on Australian dollar and New Zealand dollar options, while the country’s regulator, the Australian Prudential Regulation Authority, is conducting a separate review of NAB’s risk management controls. The results from NAB’s internal inquiry should be completed by the end of February, the bank said.
Nonetheless, dealers continue to express surprise that NAB’s internal controls hadn’t flagged the unauthorised trades earlier. The rogue trading spanned three months, starting last October. “It’s incredibly difficult to hide A$360 million in options losses,” said one dealer, asking not to be named. “It’s difficult to see how this was missed.”
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