The UK operations of National Australia Bank Ltd (ASX: NAB) are again in the spotlight following a decision by the European nation's Financial Conduct Authority to hand down a record fine.
Totalling £20.7 million ($40.1 million), the fine to Clydesdale Bank (one of two of National Australia Bank's fully-owned subsidiaries), is the largest of its kind and comes as a result of poor treatment of up to 100,000 customers seeking payment protection insurance products.
Acting Clydesdale Bank CEO, Debbie Crosbie, was forced to apologise for the bank's' poor practices, which the regulator also said misled the Financial Ombudsman Service.
"We got this wrong and I'm sorry for that," Ms Crosbie was quoted as saying in The Guardian. "We deeply regret any instance which led to the Financial Ombudsman Service receiving incorrect or incomplete information from us."
National Australia Bank has continued to be plagued by its UK exposure since the Global Financial Crisis with bad debts and poor performance coupled with large write-offs or provisions.
Whilst the $40 million fine is a drop in the ocean for NAB, Clydesdale Bank said it will review the PPI complaints it received before August 2014 as a result of the FCA's findings.
In 2014 NAB issued a profit downgrade and, when it reported full year results in October, saw cash profits fall around 10% as its previously announced $1.5 billion in provisions and impairments took their toll on the bottom line.
Should you buy NAB shares now?
Although it has continued to be rocked by bad press, shares of NAB have rallied 16.4% so far in 2015 – easily outperforming Commonwealth Bank of Australia (ASX: CBA) and the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
However as I recently noted NAB's troubles in the UK are ongoing and despite its recent decision to put its two UK banks, Clydesdale and Yorkshire, up for sale, investors are advised to avoid buying its shares at these inflated prices.
