National Australia Bank chief executive Andrew Thorburn says he felt sadness and grief after discovering someone with whom he had "a longstanding personal relationship" was allegedly involved in a multi-million dollar fraud against the lender.
Thorburn, who used to run the bank's NZ subsidiary BNZ, said he would not discuss the identity of those involved - one of whom is understood to be an ex-NAB employee - but said he will back police to take whatever action they deem necessary.
Thorburn said NAB discovered the alleged corporate fraud in December and passed the findings of its own investigation to police in January.
"There have been times during my career in banking where people step over a line - and that line is what's legal and what's the law - and they commit actions for their own gain and when they're found out it always ends in a very unfortunate situation for them and their families," a visibly emotional Thorburn told reporters on Wednesday.
"In these cases there are people involved who I know and have worked with and there is a grief I have for them as well as, deeply, for the bank."
Police raided two businesses and a home in Sydney on Tuesday as part of an investigation into an alleged fraud that also involved a former supplier.
Thorburn said he was personally personally affected by what he said, if proven, would be a very significant breach of trust.
"I'm hurt because there are people here who are alleged to have been involved that I know who they are and - particularly in one case - I've had a longstanding personal relationship," Thorburn said.
The allegations are that a person received corrupt commissions to authorise inflated invoices sent to the bank by a contractor.
Thorburn said the bank could not put a figure on the amounts of money involved, which detectives believe could total tens of millions of dollars taken over several years.
He said the bank would update investors at its half-year results on May 3.
"In amounts, they're not material for the bank, but they're material for our reputation," Thorburn said.