Accountability and board functionality: National Australia Bank's experience

Thomson, Dianne and Jain, Ameeta 2006, Accountability and board functionality: National Australia Bank's experience, in Banking and securities markets: convergence, innovation and regulation, Melbourne Centre for Financial Studies, Melbourne, Vic., pp. 1-28.

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Title Accountability and board functionality: National Australia Bank's experience
Author(s) Thomson, DianneORCID iD for Thomson, Dianne
Jain, AmeetaORCID iD for Jain, Ameeta
Conference name Financial Services Institute of Australasia. Conference (11th: 2006: Melbourne, Vic.)
Conference location Melbourne, Vic.
Conference dates 25-26 Sep. 2006
Title of proceedings Banking and securities markets: convergence, innovation and regulation
Editor(s) Mitchell, David
Publication date 2006
Conference series Financial Services Institute of Australasia Conference
Start page 1
End page 28
Publisher Melbourne Centre for Financial Studies
Place of publication Melbourne, Vic.
Summary The National Australia Bank’s (NAB) experience of corporate governance has been contrary to current standards of good corporate governance, accountability and risk management. Over the last few years NAB’s misadventures have brought it under intensive media scrutiny with the HomeSide losses and the investigation by the Securities and Exchange Commission in the USA for breaches of auditor independence. More recently the unauthorised trading by its foreign exchange dealers violated NABs risk management practices and the subsequent board crisis resulted in significant downgrading of the share price on the Australian Stock Exchange (ASX). This paper briefly reviews the international history of corporate accountability and its growth in Australia. The increasing shareholder and legislative pressure to improve sustainability, accountability and board functionality have driven these issues to the forefront of Governing Boards’ agendas worldwide. The board remains ultimately responsible for all actions of the company and this is highlighted by APRA’s recent release of the new governance standard APG510 for implementation by October 2006. The impact of NAB’s board dysfunction on its overall performance is compared with the other major banks in Australia. Cost efficiency ratios, share price and total shareholder return are used as measures of performance and profitability. It is clear, from NAB’s recent experience, as the worst performer of all the majors, with a 19.7% fall in net profit and a cost to income ratio of 57.4% in 2004, that the NAB board needs to improve its performance and accountability to meet a sustainable increase in profitability and higher return for investors.
Notes Held at the Finsia-Melbourne Centre for Financial Studies, Banking and Finance
Language eng
Field of Research 150203 Financial Institutions (incl Banking)
HERDC Research category E1 Full written paper - refereed
Copyright notice ©2006, Melbourne Centre for Financial Studies
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Document type: Conference Paper
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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