Nick Leeson Lost Twice the Capital of His 233-Year-Old Bank in an Account Numbered 88888

Nick Leeson was a 25-year-old derivatives trader at Barings Bank's Singapore office in 1992 when a junior on his desk made a £20,000 mistake on a Nikkei trade. Leeson hid the loss in an error account he had set up the year before, numbered 88888 — a number considered lucky in Chinese culture and inconspicuous to Barings' London auditors. By the end of 1992, account 88888 held about £2 million in hidden losses, mostly his own. By late 1993 it held £23 million. By the end of 1994, £208 million.

The trade that finally killed him was a short straddle on the Nikkei index — a bet that the index would not move much in either direction. On January 17, 1995, the Great Hanshin earthquake destroyed Kobe and sent Tokyo's market sharply lower. Leeson's position turned catastrophically loss-making and he doubled down, buying Nikkei futures aggressively in the hope of pushing the market back up himself. It didn't work. By the time he fled Singapore on February 23, 1995, leaving a note that read "I'm sorry," account 88888 contained losses of £827 million, twice the entire trading capital of Barings Bank. Barings had been founded in 1762; ING bought it for £1 the following month.

Leeson was arrested in Frankfurt, extradited, and sentenced by District Judge Richard Magnus in Singapore to six and a half years at Changi Prison. He served four. He later earned a psychology degree from Middlesex, wrote a memoir, and gives corporate talks on operational risk.