Barings Bank

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1. What was the case about? (Summary of the Case) The case was about how one man single-handedly brought down one of the world’s most historic banks. The man was Nick Leeson and it happened from 1992 to 1995. He did it while holding the position of general manager to Barings Securities in Singapore. As general manager he oversaw both trading and back office needs, something uncommon in the industry due to the fact that it eliminated necessary checks and balances that would prevent such fraud from occurring. He had authority to deal in futures and options order for clients or other firms within Barings and arbitraging price differences between Nikkei futures traded on the SIMEX and Osaka exchange, it was a low risk strategy meant to…show more content…
5. How did the case come to the attention of the media? The case came to the attention of the media when Barings bank executives discovered Leeson’s trading activity and informed the Bank of England that they would not be able to meet SIMEX’s margin call, therefore declaring them bankrupt. Leeson had fled Singapore to Malaysia with his wife in an attempt to make it to London. They where arrested in Frankfurt. 6. What was the outcome of the case? Barings Bank collapsed because it was unable to meet SIMEX’s margin call. The bank of England was unable to save it due to the weariness of investors, they believed it was a black box and there wasn’t enough time to account for all the losses. On March 3rd, 1995 it was bought by ING for £1 and took on all of its liabilities. Nick leeson and his wife where arrested the same day in Frankfurt, Germany trying to arrive to England to avoid extradition to Singapore. He went on trial in Singapore and was found guilty of fraud; he was sentenced to serve six and a half years. While in prison he contracted cancer, survived and wrote and autobiographical book called “Rogue Trader”. 7. How could this case been avoided? The situation could have been avoided if Barings would have had the appropriate checks and balances required to prevent fraud. In Leeson’s own words "I completely recognize my fault in what happened, but it was clear Barings were incompetent, and their lack of oversight was appalling – all

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