Australian Shareholders Association Calls for NAB Chairman's Resignation

The Australian Shareholders' Association has urged the newly appointed National Australia Bank Ltd (NAB) chairman, Graeme Kraehe, to resign from his directorships at Brambles Ltd and News Corp Ltd within a week to devote more time to rebuilding the bank's confidence and morale. This request comes after the resignations of NAB's chief executive Frank Cicutto and chairman Charles Allen due to a rogue trading scandal that cost the bank A$360 million (US$286 million). ABN Amro Morgans has expressed surprise at Kraehe's appointment ahead of the outcome of a PricewaterhouseCoopers investigation into the scandal.

Key Takeaways:

• The Australian Shareholders' Association (ASA) is demanding that NAB chairman Graeme Kraehe step down as a director from Brambles Ltd and News Corp Ltd within a week to focus on the bank.
• Mr. Kraehe has been reviewing his workload as he sets about rebuilding confidence and morale at NAB, which has been affected by the resignations of its chief executive and chairman.
• ABN Amro Morgans is surprised by Kraehe's appointment ahead of the outcome of a PricewaterhouseCoopers investigation into the rogue trading scandal.
• The ASA believes that it is premature to appoint a director from a board that could be found to have failed in its responsibilities.
• John Curry, ASA chairman, cited laws in the UK and France that limit the number of major companies a person can chair or be a director of, suggesting that Kraehe's appointments are a concern.
• Curry also suggested that some other NAB directors should consider stepping aside to allow more experienced individuals to take on the roles.
• Citigroup Smith Barney and Credit Suisse First Boston have expressed concerns about Kraehe's appointment, with the latter suggesting that it was a populist move and not the right decision for the bank.

Statistics:

• US$286 million: The cost of the rogue trading scandal to National Australia Bank Ltd.
• A$360 million: The cost of the rogue trading scandal to National Australia Bank Ltd in Australian dollars.
• 1 week: The timeframe given by the ASA for Kraehe to step down from his directorships at Brambles Ltd and News Corp Ltd.
• 2 major companies: The number of directorships that individuals are allowed to hold in Australia under the ASA's proposal.

Sources:

• Asia Pulse, "NAB chair faces pressure to quit directorships", 18 February 2002.
• ABN Amro Morgans, press release.
• Citigroup Smith Barney, research report.
• Credit Suisse First Boston, research report.
• Australian Shareholders' Association, press release.