Nick Leeson’s unauthorized derivatives losses caused Barings Bank to collapse in 1995.
Leeson worked for Barings in Singapore and traded futures and options linked mainly to Japanese equity markets. He hid losses in an error account, commonly identified as account 88888, while continuing to make increasingly risky trades in an attempt to recover the money.
The 1995 Kobe earthquake contributed to market volatility and worsened Leeson’s positions. His losses eventually reached about £827 million, more than the bank could absorb. Barings, founded in 1762 and once regarded as one of Britain’s most prestigious banks, was sold to ING for one pound.
The episode is often described as a stock-market crash, but it was more precisely a rogue-trader failure amplified by volatile markets and weak internal controls. Leeson later wrote a memoir, Rogue Trader, and served a prison sentence in Singapore.