The 28-Year-Old Trader Who Sank a 233-Year-Old Bank

Barings Bank was founded in 1762. It financed the Louisiana Purchase for the US government. It survived the Napoleonic Wars, two world wars, and the Wall Street Crash of 1929. In February 1995 it was destroyed in ten weeks by a 28-year-old trader sitting in Singapore.

Nick Leeson arrived at the Singapore office in 1992 and ended up running both the trading desk and the back office meant to audit it — a structural mistake Barings' head office never caught. He hid losses in an internal error account, numbered 88888, which he had quietly cut out of the reports going to London. When a trade went bad he doubled down, trying to win it back.

The Kobe earthquake of January 17, 1995 knocked Japanese markets into chaos. Leeson held a huge long position on Nikkei futures. As the index fell, he bought more, betting on a rebound that did not come. By the time he bolted for the airport on February 23, the error account held £827 million in losses — more than twice Barings' entire trading capital.

ING bought what was left of the bank for a nominal £1 on March 5, 1995. Leeson was arrested in Frankfurt, extradited to Singapore, and sentenced to six and a half years. He served almost four, was diagnosed with colon cancer in prison, and later wrote a memoir titled Rogue Trader.

The Bank of England inquiry blamed the same structural flaw Leeson exploited: one man controlling both trades and their audit. The 'segregation of duties' requirement now cited in every operational risk textbook is, essentially, rule one of the post-Barings era.