APRA Report to Focus on NAB's Foreign Exchange Woes and Senior Officials' Role

Strategic Insights -

The Australian Prudential Regulation Authority's (APRA) report on the National Australia Bank's (NAB) foreign exchange trading scandal is expected to shed light on the number of times APRA alerted NAB to its concerns, as well as the role of senior bank officials in failing to address the issues. The Senate Estimates Committee has expressed interest in investigating whether APRA gave NAB enough "rope" to correct its problems, and whether the bank agreed to a timetable for reforms. The committee will also examine the communications between APRA and NAB, with some suggesting that the regulator's concerns may have been more frequent than reported.

Key Takeaways:

  • The Senate Estimates Committee will hold an inquiry into the NAB foreign exchange trading scandal, focusing on APRA's report and the role of senior bank officials.
  • APRA chairman John Laker stated that his team had been in "constant dialogue" with NAB over the past 12 months, raising concerns about the frequency of communications between the regulator and the bank.
  • The report may reveal how many times APRA alerted NAB to its foreign exchange problems, and whether the bank agreed to a timetable for reforms.
  • Pressure on NAB director Catherine Walter to resign has intensified, with some calling for her to quit amid criticism of the bank's audit committee, which she chaired.
  • Institutional investors are reportedly relaxed about Ms. Walter's ongoing board role, despite her coming under pressure from the NAB board to quit.
  • The role of other senior bank officials in failing to alert top management about the seriousness of APRA's concerns is expected to come under renewed scrutiny.

Statistics:

  • The NAB foreign exchange trading scandal cost the bank $360 million.
  • APRA's report is expected to be finalised this week.
  • The six-member APRA investigative team leading the inquiry is headed by general manager David Lewis, who will be accompanied by APRA chairman John Laker when presenting the report to the NAB board.
  • The Senate Estimates Committee will meet in May to hold its inquiry into the NAB scandal.

Sources:

  • [Senate Estimates Committee spokesman, as quoted by Duncan Hughes]
  • [PricewaterhouseCoopers (PwC) report, February 2023]
  • [Australian Shareholders Association, John Curry, as quoted by Duncan Hughes]