Barings Bank 25 years on: an interview with Nick Leeson

On 26th February 1995, a trading loss of £827m accumulated in secret by the original ‘rogue trader’ Nick Leeson, brought the world’s second oldest merchant bank crashing to its knees.

Many rogue trading cases have made the headlines in the 25 years since the collapse of Barings Bank; some involving losses that eclipse Leeson’s £827m. It’s a story that has been covered time and time again, but nonetheless, it remains one of the most memorable loss events in recent history and continues to influence banking regulation to this day.

The demise of Barings was a catalyst for major change in the financial services industry and would cement the formation of operational risk as a distinct risk category. Monitoring of activities on the trading floor would never be the same again.

In an exclusive interview, Nick Leeson spoke to Carrie Cook at RiskBusiness about the event that changed his life and the industry he worked in, forever. He reflected with honesty on how things have changed since his time as the 28-year-old rising star at Barings’ Singapore office; in particular, attitudes towards mental health and pressures in the workplace.

“I could have quite simply have asked for help and advice, and I didn’t do that,” he said. “That then set me down the wrong path. Had I felt empowered to speak about it...explain some of the issues that I was facing – who knows? I can’t guarantee this to you, but the story could have been very, very different.”

Banking misconduct is still rife, despite lengthier prison sentences, stricter governance rules post-crisis, and a greater focus on culture and corporate responsibility. “Banking is a very strange industry where people get paid a lot of money. And sometimes people find it difficult to rock the boat and ask difficult questions,” said Leeson. “I don’t think that’s changed. I think a lot of people get caught in those particular roles; they’re getting a decent salary; they probably won’t get that anywhere else.”

Does Leeson believe the prison sentences and fines handed out for misconduct are enough to make a lasting impact on culture? “People are very influenced by what they see and what they hear…If you see people doing wrong and then being brought to task, you think twice about doing it yourself. Unfortunately, 25 years ago...everybody was putting trades in error accounts, nobody really worried about doing it; it almost became commonplace. And so, when it was my turn to put a trade into an error account, it was far easier to do than it should have been.”

The full interview was published on 26 February 2020 by RiskBusiness and is available here.


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