National Australia Bank announced last week that recently uncovered losses stemming from foreign exchange option trades will total around AUD360 million (USD278.7 million). The Aussie market had been buzzing with rumors about the extent of the losses because NAB had revised estimates up to AUD600 million in recent weeks (DW, 1/26). The losses stem from what NAB deems as unauthorized options trades on the Aussie and Kiwi dollars against the greenback. Brandon Phillips, spokesman at NAB, said the losses would be AUD252 million after taxes.
John Miles, director at Fitch Ratings in Brisbane, said, "We've highlighted that we are looking for two things: precision in the numbers and reasons why risk management failed to detect this. While the losses have been disclosed, the issue that remains unresolved is what changes there will be in the risk management systems." Fitch is keeping the bank's AA credit rating on negative watch until further information is available on how the bank will improve its risk management procedures.