The Bank of New Zealand won’t be directly affected by recommendations that its parent, National Australia Bank, reassess its IT systems in wake of the sacking of four NAB traders. However, it will be involved in a broader review of the company’s culture.
The traders racked up and hid $A360 million in losses on currency options.
The Australian Prudential Regulation Authority (Apra) has instructed the bank to take a look at how Horizon, its currency options trading system, was implemented. It also urges it to “re-assess whether the timeframe for implementation of system upgrades, including development of better system upgrades, should be accelerated”.
Horizon, designed by Sydney-based software maker Triaxia, isn’t in use at the BNZ and NAB spokesman Brandon Phillips says the issues regarding the forex system are related mainly to Australia and the UK.
“The impact of them on the BNZ is non-existent, except in that the BNZ is part of our group and any broader culture change will be addressed across the group.”
NAB released the Apra report last month following the publication of an internally commissioned report by PricewaterhouseCoopers earlier this year.
The PwC report also looked into the role Horizon — and its testing and implementation by the bank — may have played in the currency trading scandal.
It believed the rogue traders used a window in Horizon that enabled them to conceal the illegal trades, which they had been making since September 2001.
The Apra report says “NAB has not provided documentation regarding the extent of user acceptance testing undertaken upon the implementation of the Horizon system and upgrades to the pricing models used for [it]”.
NAB executives have pledged to change the bank’s culture and governance to ensure the trading episode isn’t repeated.