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Barings Bank

Fate	Collapsed (Purchased for £1 by ING).
Successor	ING Group
Founded	1762
Defunct	1995
Location	London
Industry	Banking
Key people	Sir Francis Baring (founder)

Barings Bank (1762 to 1995) was the oldest merchant bank in London ^[1] until its collapse in 1995 after one of the bank's employees, Nick Leeson, lost £827 million ($1.4 billion) speculating - primarily on futures contracts.

Barings Bank was founded in 1762 as the 'John and Francis Baring Company' by Sir Francis Baring. In 1806 his son Alexander Baring joined the firm and they renamed it Baring Brothers & Co., merging it with the London offices of Hope & Co., where Alexander worked with Henry Hope.

Barings had a long and storied history. In 1802, it helped finance the Louisiana Purchase, despite the fact that Britain was at war with France, and the sale had the effect of financing Napoleon's war effort. Technically the United States did not purchase Louisiana from Napoleon. Louisiana was purchased from the Baring brothers and Hope & Co.. The payment for the purchase was made in US bonds, which Napoleon sold to Barings at a discount of 87 1/2 per each $100. As a result, Napoleon received only $8,831,250 in cash for Louisiana. Alexander Baring, working for Hope & Co., conferred with the French Director of the Public Treasury François Barbé-Marbois in Paris and then went to the United States to pick up the bonds before taking them to France.

Later daring efforts in underwriting got the firm into serious trouble through overexposure to Argentine and Uruguayan debt, and the bank had to be rescued by a consortium organized by the governor of the Bank of England, William Lidderdale, in the Panic of 1890. While recovery from this incident was swift, it destroyed the company's former bravado.

Its new, restrained manner made it a more appropriate representative of the British establishment, and the company established ties with King George V, beginning a close relationship with the British monarchy that would endure until Barings' collapse (Diana, Princess of Wales was the great granddaughter of one of the Barings family). The descendants of the original five male branches of the Baring family were all appointed to the peerage with the titles Baron Revelstoke, Earl of Northbrook, Baron Ashburton, Baron Howick of Glendale and Earl of Cromer. The company's restraint during this period would cost it its pre-eminence in the world of finance, but would later pay dividends when its refusal to take a chance on financing Germany's recovery from World War I saved it the painful losses experienced by other British banks at the onset of the Great Depression.

Main article: Barings Bank collapse

It has been suggested that Barings Bank collapse be merged into this article or section. (Discuss)

The Barings Bank collapse of 1995 is considered a pivotal turning point in the history of banking and has become a textbook example of accounting fraud. Over a period of three years, Nick Leeson, a Singapore-based management employee of Barings Bank, lost £827 million (US$1.4 billion), primarily on futures contract speculation, and through manipulating the records, hid his actions until February 1995.

When the losses were revealed, Barings Bank was forced to default on its accounts^[2] and eventually was broken up and sold.

• Leonard Ingrams, former Managing Director and founder of Garsington Opera.
• "High Speed Money", a film about the broker Leeson.
• Rogue Trader 1999 film starring Ewan McGregor.

1. ^ Reason, James (1997). Managing the Risks of Organizational Accidents. Ashgate Publishing Limited, 29. 
2. ^ Reason, James (1997). Managing the Risks of Organizational Accidents. Ashgate Publishing Limited, 28-34. 

• Rogue Trader (1996, hardcover) ISBN 0-316-51856-5; (1997, softcover) ISBN 0-7515-1708-9, Book by Nick Leeson giving his account of the Barings Bank collapse.

• Nick Leeson Official Website of the Barings Rogue Trader
• http://www.numa.com/ref/barings/
• http://www.nytimes.com/books/first/f/fay-collapse.html