Report on Barings Brothers (Uk, 1995)

Report

On

Barings Brothers (UK, 1995)

By Group 12

TABLE OF CONTENTS

I. Introduction...................................................................................................... 3

II. The beginning of the debacle………………………………………………… 3

Nick Leeson’s trading strategy………………………………………………. 4

- The trade activities by Nick Leeson………………………………….. 4

- The trade strategy causes the debacle………………………………. 5

Senior management …………………………………………………………. 5

- Senior management in case of debacle ………………....................... 5

- Measures may prevent losses………………………………………… 7

Aftermaths…………………………………………………………………… 7

- Aftermath for companies……………………………........................... 8

- Individuals responsible for losses……………………………………. 8

Reaction and measures taken by local market regulator……………………. 8

III. Conclusion…………………………………………………………………… 9

IV. Reference........................................................................................................ 10

Introduction

In this report we would like to present the case of Barings collapse, which is most known as its bankruptcy leading by one man.

Baring investment bank was proud of his long history and loyalty client, especially Queen Elizabeth. However, Nick Leeson , the chief trader of Baring bank in Singapore, turned the bank down with huge liabilities totalling $1.4 billion by his bad decisions on the future and option market. At beginning, Nick Leeson tried to hide his loss for the trading in SIMEX, OSE and TSE in a fraud account, number 88888. The amount of loss was rising. The fatal decision which causes the Baring bank went to bankrupt was made by Nick Leeson at the 16th January 1995. He accumulating positions in the stock index futures on the Nikkei 225, the earthquake hit in Kobe make the market drop more than 15 percent in January and February 1995. The unstable market implied a huge loss of Nick...