NAB CEO resigns after forex options scandal

National Australia Bank chief executive Frank Cicutto has resigned following a foreign exchange options trading scandal that has cost the bank A$360 million ($274.5 million). He has been replaced by John Stewart, executive director of NAB’s UK business and a former deputy chief executive of Barclays Bank.

Cicutto’s resignation comes two weeks after the bank revealed that four of its traders had engaged in unauthorised foreign exchange options trading spanning three months, from October last year. The bank initially estimated the losses from these fictitious trades to be A$180 million, raising the total losses to A$360 million last week after a comprehensive review of its foreign exchange options portfolio.

“I regret the decision was necessary but I believe it is in the best interests of the bank,” said Cicutto in a statement.

The former chief executive will receive a resignation payment of A$3.27 million, and will be entitled to statutory and award payments including accrued annual leave and long service leave. However, Cicutto will forego A$1.293 million in shares that were approved in the 2003 annual general meeting.

Stewart, previously the chief executive of former UK building society Woolwich before it became part of the Barclays Group in 2000, will relocate from London to Melbourne to take up his new role. Talking at a press conference today, Stewart said his top priorities are to create sustained growth and restore the reputation of Australia’s biggest bank after the forex options scandal.

“This is a very famous bank, but I think it’s clear that it hasn’t been fulfilling its potential,” he said.