Nick Leeson caused Barings Bank’s 1995 collapse through unauthorized derivatives trading in Singapore.
Leeson worked for Barings Futures Singapore, the bank’s trading operation on the Singapore International Monetary Exchange. He accumulated large losses while trading futures and used an error account, numbered 88888, to hide them from supervisors.
Instead of stopping, Leeson increased his positions in an attempt to recover the losses. The 1995 Kobe earthquake contributed to market movements that made the losses worse. By the time the position was uncovered, the total deficit was about £827 million.
Leeson fled Singapore and was arrested in Germany. Barings, founded in 1762 and one of Britain’s oldest merchant banks, was unable to survive the loss and was sold to ING for £1 in 1995. The case became a classic warning about weak internal controls and inadequate separation between trading and settlement duties.