The jailing of a former executive couldn’t come at a more inopportune time for the National Australia Bank Ltd. (ASX: NAB) share price.
The NAB share price tumbled 1.9% in after lunch trade to $23.76 as the stock was swept up in the broader market sell-off.
While the minimum four years nine months imprisonment of ex-NAB employee Rosemary Rogers isn’t a factor in the falling NAB share price, it reminds investors of the bank’s chequered past.
NAB share price tainted by scandals
I think it’s safe to say that no other ASX bank is as scandal prone as NAB. Let’s not forget it was the only major financial institution to lose both its chairman and chief executive to the Banking Royal Commission.
Those with a long enough memory might also recall the jailing of another NAB employee during the failed takeover of AMP Limited (ASX: AMP).
NAB exec’s $5.4 million crime spree
Coming back to Rogers, she was the personal assistant to two NAB CEOs and used her position to defraud the bank of $5.4 million over four years.
She used her proceeds from crime to buy property, a new BMW SUV, a boat, caravan and luxury holidays.
Rogers got her ill-gotten gains by approving fake or inflated invoices from Human Group and received kick-backs.
Human Group director Helen Rosamond is facing trial for her part in the alleged crime and denies her charges.
Don’t feel sorry for NAB
It’s shocking that a bank, which is an institution that is usually highly focused on risks, security and compliance, could be caught with its pants down.
Even the judge in Rogers’ case expressed surprise that the crime could go on for so long without detection.
Rogers was only caught because an anonymous whistle-blower sent a letter to NAB’s board.
NAB share price discount back in spotlight
What’s interesting is that the NAB share price has historically traded at a discount to its peers. This includes the Commonwealth Bank of Australia (ASX: CBA) share price, Westpac Banking Corp (ASX: WBC) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price.
This is largely due to governance concerns, if you asked me.
However, the NAB share price has recently outperformed. The stock has gained more than 30% over the past six months as investors pounced on perceived bargains.
One has to wonder if scandal-ridden NAB can keep investors onside over the longer term.
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Motley Fool contributor Brendon Lau owns shares of AMP Limited, Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.
The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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