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.

INVESTOPEDIA EXPLAINS '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. Nick Leeson

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

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

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

    The characteristic of excessive confidence or arrogance, which ...
  5. Derivative

    A security whose price is dependent upon or derived from one ...
  6. Rogue Trader

    A trader who acts independently of others - and, typically, recklessly ...
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 >>
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. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.
  6. Options & Futures

    Was Buffet Right about Derivatives as WMDs?

    Why Warren Buffet described derivatives as weapons of mass destruction, and when can they be helpful or harmful?
  7. Options & Futures

    Examples Of Exchange-Traded Derivatives

    We look at some of the most common exchange-traded derivatives.
  8. Options & Futures

    Advantages Of Trading Futures Over Stocks

    We look at the top eight advantages of trading futures over stocks.
  9. Options & Futures

    Why Trading Coffee Futures Is A Zero Sum Game

    Coffee futures trading is as close to a zero-sum game as you might find in investing. We look at the risks and rewards.
  10. Options & Futures

    Avoid Future Shock By Protecting Your Portfolio With Futures

    Worried about protecting your portfolio of diversified stocks and assets? Using futures with correct strategies can help.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center