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Banking industry

National Australia Bank CEO Quits Amid Currency-Trading Scandal

Strategic Insights

— 1 min read

Frank Cicutto, the chief executive of National Australia Bank, unexpectedly resigned on Monday, six months before his contract was set to expire in 2006. Cicutto, who had been with the bank for 37 years, had declared last week that he would stay until his contract ended, but the bank's disclosure of a $191 million loss in unauthorized currency-trading options led to his sudden departure. The bank's new CEO, John Stewart, a former Barclays executive, has taken the reins, marking the first time in the bank's 145-year history that a non-Australian leader has been at the helm. Shares of the bank jumped over 2 percent to a three-month high in trading before closing 1.5 percent firmer at 31.02 Australian dollars ($23.61).

Key Takeaways:

  • Frank Cicutto, the CEO of National Australia Bank, unexpectedly resigned on Monday after 37 years with the bank.
  • Cicutto had declared last week that he would stay until his contract expired in 2006, but the bank's disclosure of a $191 million loss in unauthorized currency-trading options led to his sudden departure.
  • John Stewart, a former executive at Barclays, has taken over as CEO, marking the first time in the bank's 145-year history that a non-Australian leader has been at the helm.
  • The bank has suffered several missteps during Cicutto's tenure, including taking 2.2 million Australian dollars ($1.7 million) in write-downs in 2001 on its former mortgage servicing arm in the United States.
  • National Australia Bank had also unsuccessfully tried a takeover of AMP, the Australian insurer and funds manager.
  • The bank suspended four currency-options traders pending the outcome of internal and external investigations into how its trading limits were breached.

Statistics:

  • the bank lost $191 million in unauthorized trading of currency options
  • $1.7 million in write-downs in 2001 on its former mortgage servicing arm in the United States
  • 2.2 million Australian dollars in write-downs
  • 4 currency-options traders were suspended pending investigation
  • 3-month high in trading before closing 1.5 percent firmer at 31.02 Australian dollars ($23.61)
  • 145 years in the bank's history with a non-Australian CEO
  • 37 years with National Australia Bank for Frank Cicutto
  • 6 months before his contract expired in 2006 when Frank Cicutto resigned

Sources:

  • The New York Times
  • Bloomberg
  • Sydney Morning Herald

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