Banking & Capital Markets Case Studies

Bringing a Fresh Perspective to the National Australia Bank

In January 2004, PwC Australia was appointed to investigate and report on unauthorised foreign currency options trading at Australia's largest financial services company, the National Australia Bank (NAB). The events under investigation had resulted in losses amounting to A$360 million.

The investigation has been acknowledged as an outstanding example of forensic accounting and widely recognised for its best-practice approach to risk management, governance and corporate reporting.

The PwC team worked closely with the Australian Prudential Regulation Authority (APRA), as part of its investigation. The subsequent report, which the NAB publicly released on 12 March 2004, identified a range of process and control issues and cultural factors that contributed to the unauthorised foreign exchange options trading.

In August 2004, CFO magazine named PwC Australia Audit Firm of the Year, partly because of its investigation and report.

"Another reason for [PwC Australia's] high score in the minds of business people this year was its report on the foreign currency options trading at the NAB, which exposed cultural problems within the bank which the NAB chief executive, John Stewart, has been trying to rectify," said CFO.

Global Transactions Team Assists Macquarie Communications Infrastructure Group

In October 2004, a PricewaterhouseCoopers Australian/UK team won a competitive tender to work with the Australian-based Macquarie Communications Infrastructure Group (MCG) on its consortium's ultimately successful A$3.0 billion bid for National Transcommunications Limited and NTL Digital Limited (together 'ntl:Broadcast') in the UK. Macquarie Bank Limited advised MCG, in which the bank has a 13% interest, on the acquisition of ntl:Broadcast, one of the leading independent owners and operators of broadcast transmission and wireless site-leasing infrastructure in the UK market.

PwC provided services including financial and tax due diligence, tax structuring, market due diligence and model review for the acquisition, and accounting and market experts' reports for the subsequent A$1.0 billion equity fund-raising.

As MCG's auditor, PwC had to overcome governance issues which meant it couldn't offer a success-based fee arrangement. Because this made the firm potentially more expensive than competitors if the bid was unsuccessful, PwC had to clearly demonstrate the superiority of its expertise over the competition to win the work. The keys to the firm's success were its breadth and depth of skills and industry knowledge across its entire network and the strengths of its existing relationships at MCG.

"Throughout this challenging two-month assignment, the PwC team was available 24/7 providing a truly impressive case study of how to work with us in a cross-border deal at a time when we are looking to expand our non-Australian investments." Ben Perham, Division Director, Investment Banking Group, Macquarie Bank Limited.