NAB credit rating unaffected by FX options losses, says S&P

“S&P will closely monitor the bank’s investigation of its risk management practices so as to better understand the nature of the risk management breakdown and the extent to which this incident is indicative of the strength of the bank’s overall risk management capability,” said S&P credit analyst Craig Bennett.

S&P said the disruption to risk management processes, at a time when the bank’s trading risk management is being centralised to Melbourne from offshore, could have contributed to the unauthorised actions not being detected earlier.

“Although the size of the loss is manageable given the bank’s earnings generation and capital adequacy, S&P is concerned about the breakdown of formal risk management controls,” said Bennett.