The royal commission isn't done hurting National Australia Bank Ltd's (ASX: NAB) share price. The NAB share price has fallen almost 1% as claims surface that it knew, or at least part of its leadership knew, it had been selling prohibited products.
Reporting by the Australian Financial Review, The Sydney Morning Herald and The Age alleges that the NAB chairman Dr Ken Henry knew that the bank had been selling prohibited products.
The product in question that Dr Henry supposedly knew about was that self-managed super funds (SMSFs) were borrowing to invest in managed funds even though SMSFs are prohibited from borrowing to invest unless there is a limited recourse borrowing arrange in place, typically limited to a single asset of residential or business property.
Dr Ken Henry (and former CEO Andrew Thorburn) have lost their jobs at NAB because of their poor showing in the royal commission, so this could be the bad cherry on top.
The royal commission was a painful experience for NAB, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) and it seems as though the problems aren't finished yet.
The big banks are already shelling out hundreds of millions of dollars in remediation. Knowingly selling "prohibited products" could also create issues for NAB.
Foolish takeaway
The new NAB leadership team of to-be chairman Phillip Chronican and to-be NAB CEO Ross McEwan have a lot of work to do to put everything right, but they could be a steady pair of hands to fix these issues. But, it's just another reason why I'm not interested in buying shares of NAB, or any of the big banks.
