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- March 13, 1995
- Vol. 43
- No. 10
Losing His Barings
Trader Nicholas Leeson's $27 Billion Wager Topples a Venerable British Bank
The bank that financed Britain's wars against Napoleon (1798-1815), Barings was brought down by an Englishman—Nicholas Leeson, 28—who took a decidedly late-20th-century gamble. Unbeknownst to Barings' officers, Leeson wagered billions of pounds in Asian financial markets, betting that Japanese stock indexes would rise. When they fell, the bank was unable to pony up the estimated $1.1 billion Leeson had lost. Four thousand jobs are now in jeopardy as the bank tries to sell its assets. Just before news of Barings' failure spread, Leeson, who is being investigated for fraud and breach of trust, fled Singapore with his wife, Lisa Sims, 26. On March 2 they were apprehended by German police as they arrived at the Frankfurt airport.
The financial markets of Southeast Asia are a long way from working-class Watford, north of London, where Leeson grew up, the eldest of four children born to William, a plasterer, and Anne, a nurse who died in 1982. "He was a thoroughly dependable member of the school," said Brian Coulshed, headmaster at Parmiter's, Leeson's high school. His English chums recall Leeson as a quiet young man who liked soccer.
At age 18, he took a job as a junior clerk with Coutts & Co. bank. In 1989 he was hired at Barings, where Sims worked as a clerk. They were married in 1992 and transferred to Singapore. Promoted to dealer, Leeson quickly established himself as a hotshot, high-risk trader, earning $300,000 in 1993, and more than $1.5 million in salary and bonuses last year.
He also seemed to undergo a personality transformation—from working stiff to master of the universe. "Brash and blunt," says one trader who knew Leeson and who quit socializing with him more than a year ago. "He was a party animal. He would drink heavily and inevitably get into trouble." Last fall, Leeson was fined $138 for indecently exposing himself at a Singapore disco. More recently he was hauled in for disorderly conduct, but Barings reportedly got the charges dropped. It's a move they likely now regret. "Soul-destroying," is how one member of the Baring clan described the bank's crash. Leeson's kin are shaken as well. Said his father-in-law Alex Sims: "I'm certain he's only a small cog in a large wheel of misfortune.
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