Risk register · entry
Q-F · FraudBarings Bank
233 years old, one rogue trader in Singapore, sold for a pound.
The fifth quadrant, where the thing was never real. The tell is that the story is too clean.
Why this quadrant
The originating act sits in Q-F because it is a simple, deliberately concealed payoff, one man hiding losses in one account and lying about the source. It reads as a Q4 story by the end because once the position size dwarfed the bank's capital, the risk stopped being about deception and became about unbounded, fat-tailed exposure that no control or model in the building was built to detect, which is a model failure, not just a fraud.
The record
- Total concealed trading losses reached £827 million by 27 February 1995certain
- Losses rose to £927 million once all positions were closed outcertain
- Barings sold to ING for a nominal £1, which assumed all liabilitiescertain
- Barings founded in 1762 by Francis and John Baring, making it 233 years old in 1995certain
- Great Hanshin (Kobe) earthquake struck 17 January 1995, triggering the Nikkei 225 drop that exposed Leeson's positionscertain
- Losses were hidden in error account number 88888certain
- Barings declared insolvent on 26 February 1995certain
- Exact date ING's purchase was formally completed (26 February vs. 6 March 1995 depending on source)uncertain
- By December 1994 real losses were roughly £200 million against draft accounts showing a £102 million profitlikely
- Nick Leeson sentenced to six and a half years, served in Changi Prison, released in 1999 for good behaviour after about four years and four monthscertain
- Board of Banking Supervision inquiry report published 18 July 1995certain
Sources
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