New Zealand national Ross McEwan, 62, is the outgoing CEO of Britain's RBS and has also held senior roles at Commonwealth Bank of Australia.
He joins NAB as the No. 4 bank and its peers fight to win back customer trust after damaging findings at the Royal Commission inquiry into the financial sector.
Although the inquiry lambasted the whole industry for rampant fee-gouging and overly aggressive sales tactics, NAB was the worst hit of the so-called "Big Four" lenders, losing its CEO and chairman over accusations they had failed to accept responsibility for wrongdoing at the company.
"It's going to be a tough job," said banking analyst at Morningstar David Ellis. "He's facing a very hostile environment and a soft economy."
NAB shares were 2.2% higher on Friday following the announcement, while the broader financial sector <.AXFJ> was up 1.2%.
The hire presents NAB shareholders with a fresh face - but with experience in the local market - to lead the company through a period of strategic and political rebuilding, in contrast to early speculation that the company had pegged an internal candidate for the job.
McEwan is also seen as an experienced banker who has dealt with many of the issues currently facing the Australian banks, including an increasingly tough revenue environment.
Since he took over RBS in October 2013 he has returned it to profit and begun paying investors, including the British government, a dividend.
However the bank is still 62% owned by the taxpayer and its share price is down 33% since he took charge, though some of that fall reflects the drop in sterling since the 2016 Brexit referendum.
McEwan is also no stranger to criticism.
As he announced his exit from RBS, analysts raised questions over the timing of the departure, just months before Britain is scheduled to leave the European Union and with dark clouds looming over the British housing market.
The bank is also still trying to restore its public image after a series of financial crisis-era scandals, including alleged mistreatment of troubled business borrowers by its Global Restructuring Group.
McEwan had already announced in April he would leave RBS within a year, though his exit is likely to add to pressure on the bank to announce his replacement.
Alison Rose, who runs RBS's commercial arm, is seen as the favourite to take over, but RBS chairman Howard Davies said in April the bank would consider external as well as internal candidates.
"The search for a successor remains ongoing and the effective date of Ross' departure will be confirmed in due course," Davies said in a brief statement on Friday.
In a call with journalists on Friday, McEwan said he was approached by NAB soon after he resigned from RBS.
He said it was important to "protect and accelerate" NAB's transformation of its operations and culture into a better bank, a comment analysts read as signalling a restructuring beyond the bank's current digitisation project, which aims to save A$1 billion (563 million pounds) in costs and shed thousands of staff by 2020.
"Over the years we have had the occasional interactions with Mr McEwan as CEO of RBS. (During that time) RBS took multiple provisions in relation to restructuring and customer remediation," Credit Suisse analysts told clients in a note.
"With this in mind we view the risk is that Mr McEwan rebases more than what the market expects".
On Friday, McEwan said it was "a privilege to return to Australia and lead NAB at a crucial time for the bank, its customers, employees, shareholders and the broader community."
NAB said McEwan will start the role by April 2020 at the latest, and that interim CEO Philip Chronican will become its new chairman in November.
"NAB, for 20 years or so, has been underperforming," said Morningstar's Ellis. "He's got a lot of work to do to bring NAB up to its peers".
(Reporting by Paulina Duran and Byron Kaye in Sydney; Additional reporting by Ambar Warrick in Bengaluru and Rachel Armstrong in London; Editing by G Crosse, Christopher Cushing and Jan Harvey)
By Paulina Duran and Byron Kaye