How these rogue traders got away with it it not because NAB is poor at management or has bad systems ... it was becuase the traders lied. This to some extent is NAB's fault but if you have more than one person telling a lie it is hard to pick up.
Not knowing exactly how they did it ... the two most likely ways were either entering false deals on the option books. That is entering loosing trades against some other counterparties name ... or the other way would be by using false revaluation rates.
Giving false revaluation rates is not as hard as it seems ... yes we all know where the spot aud/usd is ... but unlike most things it is harder to quantify the actual levels that volatility is for an over the counter fx option. What is the 6 mth aud/jpy vol ... if you enter 16% on your reval when the actual rate is 35% you can change your p/l in a mssive way depending on your position.
Now I would presume that it was a combination of both ... and the process for NAB is firstly since their whole options team was in on it is made even harder. They have to get outside help to quantify the extent of the loss .... secondly they have to reconfirm every single trade on their books to make sure it is a real deal and not a bogus one. Thirdly once they have confirmed all the deals they have to enter the correct revaluation rates to come up with the correct loss.
Now the reason why the figure has changed is that it takes time to confirm every single deal on your books .... and I presume they by now have done this.
As to any movement in the AUD as a result of their actions .... think about it ... they have lost $180 mio ... now if all thier positions were in the AUD ... the banks position ... that being NAB ... has been SHORT AUD to create the loss (look at a chart)... in other words NAB had been selling AUD not buying as you said and to correct the problem NAB would have to buy AUD to cover the delta on thier open option position.
This action I am sure has already been done by NAB to cover thier open position so any move on the AUD will be nil from here.
As to your theory about NAB coming up with more FX losses .... well knowing NAB and some of their staff I would say from here it is unlikely. It of course may be possible, but I think very unlikely.
Just on your last point ... banks are not the ones who really move the AUD .... banks are heavily regulated by the RBA and have maximum open AUD/USD currency position limits. A breach of these limits is very serious and the RBA has the power to take a banks foreign exchange dealing licience away from them for a deliberate breach. I would presume NAB has an open position limit of somewhere around 100 to 150 mio. Compare that to say an exporter who exports 3 billion a year and decides not to hedge for a while and you will see what I mean about banks not being the ones who move the currency around.
Banks primary role is price makers and then position takers. A loss of 180 mio means that NAB would appear to have broken its fx limit with the RBA ... the RBA is I am sure aware of the problem but these things happen despite the best systems money can buy.
If any company has several levels of management lying or making up fake deals or numbers it is very hard to manage or catch. HIH is the best example in a long time but if you are old you may remember the AWA fx debacle in Australia ... and you cant go past Nic Leeson and Barings ..... if you have dealers able to be both risk takers and involved in the revaltuation process ... the results can be like this.
NAB Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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