This article is from the Australian Property Journal archive
THE National Australia Bank has fired 20 bankers and punished another 32 after discovering thousands of mortgages were issued to overseas investors without correct information. This revelation comes after UBS warned local banks are sitting on as much $500 billion worth of “liar loans”.
NAB said it first became aware of the matter in October 2015, and advised ASIC in December 2015 after an initial high-level review.
Chief customer office consumer banking and wealth Andrew Hagger said after an extensive review, the bank has identified around 2,300 home loans since 2013 that may have been submitted without accurate customer information and/or documentation, or correct information.
“What occurred was unacceptable. We have investigated this matter thoroughly, and, as we have always said, whenever we find issues we will investigate them, fix them, and hold people to account – and we did,” he added.
As a result of NAB’s review, 20 bankers in New South Wales and Victoria have been sacked and an additional 32 had “consequences applied” including the reduction of remuneration.
Hagger said the NAB has now written to the 2,300 customers – many of whom live overseas – asking them to participate in a detailed review of their loan, which may include verification of documents submitted at the time of their home loan application.
“I want to assure all of our customers that we have improved our systems, processes and programs as a result of what occurred here,” Hagger said.
Last year the banks either introduced stricter measures or stopped lending to foreign investors due to concerns over the authenticity of their documentations.
Westpac and ANZ were amongst the first to act, after concerns were raised that Chinese buyers were obtaining home loans using fake documents.
The revelations do not come as a surprise after UBS revealed in September that Australian banks are sitting on as much $500 billion worth of “liar loans” and they are underestimating the probability of defaults and losses in the event of a housing downturn.
The most common lie was overstating income and assets, whilst at the same time understating living expenses, other loans and liabilities. The report found on average applications understated their expenses and liabilities by 10-12%, although some were as high as 30%.
Australian Property Journal
