NAB acts after £98m forex scandal

NATIONAL Australia Bank, the country's largest lender, still reeling from a surprise profit downgrade last week, has switched auditors for the first time in 85 years, replacing KPMG with Ernst & Young in the wake of a A$252m (£98.5m) foreign exchange scandal.

The unauthorised currency trading, uncovered in January, has already claimed the scalps of the chairman, chief executive and several executives and board members.

It led to a bitter fight between directors and has almost certainly shortened the tenure of current chairman Graham Kraehe.

NAB, which owns the Clydesdale, Yorkshire and Northern Irish banks in Europe, said the decision to change its auditor was announced earlier as part of its 'overall change programme'.

KPMG will continue to conduct the audit for this financial year, with Ernst & Young taking over from October. KPMG was not invited to tender for the auditing job.

The bank has suffered from a series of other blunders, including an £850m writedown on its US mortgage business HomeSide.

'I would like to thank KPMG for its contribution over many years,' said John Thorn, chairman of NAB's audit committee.

The bank's new chief, Scotsman John Stewart, has blamed rising retail banking costs and competition for an expected 23% fall in its second-half profit.

A question mark hangs over NAB's plans for its British and Irish operations and Stewart, formerly of the Woolwich and Barclays, is expected to make his plans clear in the next few weeks.