The Collapse Of Barings Bank Case Study

The Collapse Of Barings Bank Case Study-54
Board notes that in 1994 Leeson made £12.7 million, whereas Barings Investment Bank as a whole made only £8.486 million.Tony Hawes describes Leeson’s request for an additional US0 million as incomprehensible given that positions were to be reduced.

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SIMEX queries adequacy of funds to meet margin calls.

xvi Summary of key events 30 January 1995 31 January 1995 2 February 1995 3 February 1995 6 February 1995 6 February 1995 8 February 1995 13 February 1995 15 February 1995 16 February 1995 17 February 1995 19 February 1995 22 February 1995 23 February 1995 24 February 1995 26 February 1995 News of alleged ‘SLK receivable’ reaches London. Bombastic conversations between Ron Baker and Tony Hawes ensue. Ron Baker due to receive £800,000 and Leeson £450,000.

Ron Baker interrupts his holiday to forcibly instruct Leeson not to increase positions.

Plc Board meets, attended by Mr Tuckey, Mr Norris and others.

Alleged ‘SLK receivable’ reported to Management Committee as an ‘operational error’. Tony Railton informs Brenda Granger and Tony Gamby that he is unable to reconcile Leeson’s accounts. Railton is instructed to continue his efforts to reconcile the accounts.

The Collapse Of Barings Bank Case Study

James Bax instructs Simon Jones to extricate Leeson from SLK ‘loop’ and ‘take on’ Tony Hawes himself. Schroders inform Barings of a rumour suggesting overexposure to a counterparty.

No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. I now have four nephews ever ready to relieve me of my small change and in whose company reading seems a waste of time and is in any case impossible. Leeson applies to Singapore International Monetary Exchange (SIMEX) for licence to trade financial contracts and again makes a false statement on the application. Leeson’s trading activities come within his purview.

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Drummond, Helga. Principal actors James Baker Ron Baker Peter Baring James Bax Gordon Bowser Geoff Broadhurst Tony Gamby Brenda Granger Fernando Gueler Tony Hawes Ian Hopkins Simon Jones Nick Leeson Peter Norris Tony Railton Valerie Thomas Andrew Tuckey Mary Waltz Internal Auditor Head of Financial Products Group Chairman of Barings Head of South Asia Risk Manager, Barings Securities Group Finance Director, Barings Investment Bank Settlements Director Manager of Futures and Options Settlement Senior Trader in Osaka Group Treasurer of Barings Investment Bank Director, Group Head Treasury and Risk Director, Barings Futures Singapore and Chief Operating Officer for South Asia Manager, Barings Futures Singapore Chief Executive of Barings Investment Bank Futures and Options Settlement Clerk Head of Compliance Deputy Chairman of Barings and Chairman of Baring Brothers Global Head of Equity Financial Products Summary of key events July 1989 February 1992 March 1992 3 July 1992 21 July 1992 24 March 1993 Late 1993 November 1993 July 1994 October 1994 11 January 1995 14 January 1995 17 January 1995 24 January 1995 27 January 1995 Leeson joins Barings as a settlements clerk initially based in London. Barings becomes ‘solo-consolidated’ for accounting purposes. This effectively means there are no constraints upon the amount of money that could be remitted to Singapore to support Leeson’s trading. Internal audit report circulated to senior management. External auditors discover £50 million discrepancy in Singapore accounts and subsequently spend two weeks trying to extract an explanation from Leeson about so-called ‘SLK receivable’. Asset and Liability Committee (ALCO) instructs Leeson to reduce positions because of funding pressure.

Printout of account 88888 discovered lying on Leeson’s desk reveals thousands of unauthorized trades, all losing money. The daily reports they had received from him had been complete fiction.

[They] had met daily and solemnly discussed the profits and supposed tiny risks of Leeson’s trading. (All that Glitters, Gapper and Denton 1996: 29) On Thursday 23 February 1995 the directors of Barings Bank hosted a lunch for City magnates.

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