Forex

The foreign exchange trade scandal that cost National Australia Bank more than Aust$360 million has claimed its chief executive, Frank Cicutto.

In a shock decision announced early Monday, Cicutto resigned after working at NAB for more than 37 years.

The markets reacted quickly to the news, with the stock rising 1.7 percent to A$31.80 in morning trade.

NAB, one of Australia's four largest banks, owns more than A$397 billion in assets and also operates several financial businesses in Britain, New Zealand and across Asia.

It owns Britain's Yorkshire Bank, Clydesdale Bank, Pivotal and Northern Bank, as well as the National Irish Bank.

The new chief executive will be John Stewart, previously the executive director of NAB's business in Britain, the bank said in a statement.

Cicutto will receive a A$3.27 million pay-out in lieu of six months notice.

He said in a statement to the markets: "I am proud of the contribution I have made to (NAB's) its development as Australia's leading banking and wealth management business.

"I am comfortable in the knowledge I am handing over a company that is well positioned for future growth."

The resignation ends a turbulent time at NAB and controversy over Cicutto's leadership, not just over the foreign exchange scandal but also heavy losses the company incurred in Britain and a failed corporate raid on AMP.

The NAB board last Thursday suspended financial incentive schemes designed for Cicutto, Stewart and other senior executives with foreign exchange trading responsibilities, pending a full report into the rogue deals.

Four dealers -- three in Melbourne and one in the UK -- lost NAB A$360 million from October to January 13, erroneously betting the dollar would rise against the Australian and New Zealand currencies.

The four traders have been suspended by NAB since the rogue trades were discovered.

Cicutto led an internal investigation into the traders' behavior, vowing to be completely open about its result.

He quickly announced last week that procedural shortcomings had been discovered and rectified, and there could be no repeat of the incident.

At the time, he said he was "bitterly disappointed" the incident had been allowed to happen by circumventing the bank's internal checks.

However, that is not the end of the matter. Three independent investigations are under way.

They are being conducted by the Australian Securities and Investments Commission, the Australian Prudential Regulation Authority and the Australian Federal Police.

Last Thursday, NAB again took the market by surprise, divesting itself of more than A$900 million in shares in leading Australian financial institutions, home lender St George and AMP.

Cicutto said the decision to sell the shares was unrelated to the foreign exchange controversy and NAB's senior management had decided to cash them in before Christmas.