Barings Bank

AAA

DEFINITION of 'Barings Bank'

A British merchant bank that was started in 1762, and for centuries was considered the largest and most stable bank in the world. In 1995, Barings - then the oldest bank in Britain - collapsed after it was unable to meet its cash requirements following unauthorized speculative trading in derivatives at its Singapore office by then-trader Nick Leeson.

BREAKING DOWN 'Barings Bank'

Leeson, acting as a rogue trader, accumulated well over $1 billion in losses, which eventually led to the bank's collapse. Barings Bank was purchased by ING for £1.00 shortly after it was determined that the bank did not have enough capital on hand to cover its debts.

RELATED TERMS
  1. Derivative

    A security with a price that is dependent upon or derived from ...
  2. Nick Leeson

    A former manager with England's Barings Bank, Leeson became a ...
  3. Speculation

    The act of trading in an asset, or conducting a financial transaction, ...
  4. Merchant Bank

    A bank that deals mostly in (but is not limited to) international ...
  5. Hubris

    The characteristic of excessive confidence or arrogance, which ...
  6. Rogue Trader

    A trader who acts independently of others - and, typically, recklessly ...
Related Articles
  1. Mutual Funds & ETFs

    Exchange Traded Notes: An Alternative To ETFs

    ETNs offer yet another way to track an index. Find out what they have to offer, and what's at stake.
  2. Economics

    Online Investment Scams Tutorial

    To bamboozle someone out of their money is an age-old ruse. Learn about some of the gimmicks modern-day swindlers use and avoid becoming a statistic.
  3. Investing

    The Biggest Stock Scams Of All Time

    Where there is money, there are swindlers. Protect yourself by learning how investors have been betrayed in the past.
  4. Options & Futures

    Trading's 6 Biggest Losers

    These "rogue traders" are famous for their billion-dollar mistakes.
  5. Investing Basics

    Understanding the Spot Market

    A spot market is a market where a commodity or security is bought or sold and then delivered immediately.
  6. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  7. Investing Basics

    Explaining Forward Rate Agreements

    Forward rate agreement (FRA) refers to an interest rate or foreign exchange hedging strategy.
  8. Options & Futures

    An Introduction To Value at Risk (VAR)

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  9. Mutual Funds & ETFs

    ETF Analysis: United States Natural Gas Fund LP

    Find out more about the United States Natural Gas exchange-traded fund, the characteristics of the ETF and the suitability and recommendations of it.
  10. Mutual Funds & ETFs

    ETF Analysis: United States Oil Fund

    Find out more about the United States Oil Fund, the characteristics of USO, and the suitability and recommendations of the ETF for investors.
RELATED FAQS
  1. How did derivatives trader Nick Leeson contribute to the fall of Barings Bank?

    When an earthquake shook Kobe, Japan in 1995, it also broke open an ongoing scandal within the walls of Barings Bank. At ... Read Full Answer >>
  2. How does a pump and dump scam work?

    A pump and dump scam is the illegal act of an investor or group of investors promoting a stock they hold and selling once ... Read Full Answer >>
  3. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  4. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  5. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  6. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  2. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  3. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  4. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  5. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  6. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!