Barings Bank collapse

Nick Leeson, a 28-year-old trader in Barings' Singapore office, held the unusual combination of running the trading desk and settling its own accounts, letting him hide mounting losses on unauthorized futures and options bets in a secret account rather than report them upward. When the Kobe earthquake sent Japanese stocks tumbling in January 1995, Leeson doubled down on positions betting the market would recover, instead deepening the losses to roughly £830 million — more than the bank's entire capital. He fled Singapore as the scale of the losses emerged and was later arrested in Frankfurt, eventually serving prison time in Singapore. Barings, a 233-year-old institution that had financed the Louisiana Purchase and banked for the British royal family, collapsed within days and was sold to Dutch bank ING for a symbolic £1, which assumed its liabilities. The episode became the standard case study in banking-risk courses for what happens when one person controls both trading and its oversight.