The National Australia Bank Ltd (ASX: NAB) and its share price are being scrutinised today. This comes as the potential Forum Finance fraud situation drags another ASX bank share into the mix.
At the time of writing, the NAB share price is off by 0.44% to $25.90. However, it is not alone in the red sea on Friday. All big four banks are showing weakness to finish the week.
Forum Finance creating muddy waters
The potential fraud saga involving Forum Finance continues to grow murkier. Only a couple of weeks ago, Westpac Banking Corp (ASX: WBC) revealed it had uncovered a potential case of fraud.
The matter relates to a portfolio of equipment leases with Westpac customers arranged by Forum Finance, founded by Bill Papas.
On Friday, reports from The Australian are suggesting NAB may also hold exposure to the fallout.
While the bank acted as Forum Finance's transactional banker, it is believed Australia's third-largest bank also holds a substantial chunk of the mortgages against Papas' property portfolio.
Papas' assets might be at risk of being reassumed to cover debts. This follows Westpac appointing McGrathNicol as liquidators. At this stage, the exact whereabouts of Papas is unknown.
Other regulatory pressures
The Forum Finance dilemma is not the only matter potentially weighing on the NAB share price. Both NAB and the Commonwealth Bank of Australia (ASX: CBA) could also be suffering some negative sentiment due to allegations involving BSP Financial Group (ASX: BFL).
The Australian Financial Review reported senior managers of the group have been ordered to be removed following breaches of anti-money laundering laws in Papua New Guinea. Consequently, CBA and NAB are caught in between due to providing 'correspondent' banking services to BSP.
Based on Australian law, both banks are mandated to carry out regular due diligence assessments on correspondent banks.
NAB share price recap
Unfortunately for shareholders, the NAB share price has been the worst-performing so far in 2021 out of the big four banks. On a year-to-date basis, NAB has returned 12.9%. Meanwhile, CBA is up 16.8%; ANZ is up 18.7%; and Westpac is up 26.7%.
Following the dip in the NAB share price, the bank's market capitalisation is now $85.84 billion.
