Risk Takers

Chapter 6 Barings Bank PLC

Leeson’s Lessons

Nicholas (“Nick”) William Leeson was relaxing at a luxury resort in Malaysia, when he heard that Barings Bank PLC, London’s oldest merchant bank, had lost $1.3 billion (£827 million), and the rogue trader responsible for these losses was fleeing from Singapore authorities. Though he was staggered by the size of the losses and stunned to learn that Barings was in administration (i.e., bankruptcy), Leeson was not at all surprised by the news because it was his massive speculative losses on futures that wiped out this venerable bank.

Leeson was chief trader and head of settlements for Barings’ wholly owned subsidiary in Singapore, dealing mainly in futures contracts for Japanese stocks, government bonds, ...