NAB finds A$185m in losses from foreign currency options trading

Internal investigations at the National Australia Bank (NAB) have revealed that A$185 million ($140 million) in pre-tax losses were made by unauthorised foreign currency options trading.

The losses were made after NAB removed a raft of fictitious trades from its foreign currency options portfolio. They were slightly higher than the bank’s original estimate of A$180 million, announced last Tuesday.

Frank Cicutto, chief executive of Australia's largest bank, said foreign currency options will continue to be a part of NAB’s markets business. “In view of the unauthorised activity that has occurred in this portfolio, the bank is undertaking a market revaluation of the remaining portfolio to ensure it conforms with our policies,” he added.

Cicutto said the bank’s initial view indicates the revaluation would lead to additional losses. “Based on our work to date, there is a very low probability that the total losses will be as high as market speculation of A$600 million. We expect to provide a further update on this matter by the end of the week,” he said.

Chairman of the bank, Charles Allen, said the board of directors had been updated on the investigations. “Following the outcomes of the investigations we will take whatever action is necessary to ensure that investors, customers and staff have full confidence in the National.”