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The Collapse of Barings


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Was Barings brought down solely by a rogue trader named Nick Leeson, or were there other darker, more systematic forces at work? Fay, a British investigative journalist, believes that the answer is yes to both questions, and he presents convincing evidence that the collapse of Barings was a disaster waiting to happen. He argues that Leeson should never have been sent to Singapore and given carte blanche to engage in options trading. Where were the regulators? Fay maintains that the Singapore SIMEX currency exchange and the Bank of England were not paying close attention and allowed events to unfold without any interference. While Fay's book complements Judith H. Rawnsley's Total Risk (HarperCollins, 1996), Fay goes further in examining what is arguably the worst trading disaster in the history of financial markets. Recommended for business libraries and larger nonfiction collections.‘Richard Drezen, Washington Post News Research Ctr., Washington, D.C.

Fay-a British journalist, financial editor and author of a book on the Bank of England-takes a close look at Barings Brothers, one of England's most prestigious banks (used by the Queen) and how it went bust after a young employee working out of its Singapore office managed to "lose" £860 million over 32 months without anyone apparently being the wiser. Fay gives a brisk history of the bank, founded in 1762, as well as a crash course on modern investment and speculation practices, with admirably understandable explanations of such terms as derivatives, short-straddle futures, swaps and cross-trading. He then turns to Nick Leeson, from a working-class suburban London family, who didn't have good enough grades to get into a university but who beat the speculators at their own game. He details, and documents, Leeson's complicated financial manipulations and argues that the trader's claim that he slipped into the scheme by accident, while putting right other people's mistakes, is untrue. Also covered are the shocking ineptness at Barings, the social divisions within the company, the confusion in financial circles after Leeson was caught in early 1995 and the inability of the Bank of England to save Barings. As a reporter, Fay is both concise and clear, and he has a nice eye for odd details, such as London's leading bankers meeting at the Bank of England in panic over the Barings collapse and sending out for pizza. (Jan.)

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