Barings 1995
Barings Bank was wiped out in 1995 by Nick Leeson’s hidden Nikkei futures losses in Singapore — a rogue-trader plus failed control story, not a macro crisis.
Definition
Leeson ran a double book: reported low-risk arbitrage, actual directional and short-vol positions, hid in an error account (88888). Management incentives and a missing split between front and back office completed the failure. ING bought the shell for £1.
Why it matters
It is still the training-film for desk controls: one person, two roles, a growing ‘hedge.’ Size versus capital was the whole risk report.
Case
Kobe earthquake vol and a doubling-down into February 1995. Loss ~£800m versus Barings’ capital. The Bank of England’s report is the primary source.
How to read it
Segregation of duties, cancel/correct rates, and whether ‘arb’ P&L can exist without a matched book you can see.