Will we learn from the bankruptcy of Barings bank ?

• Yves-Marie ABRAHAM
  Associate professor, HEC Montreal
  
• Cyrille SARDAIS
  Associate professor, HEC Montreal
  

Summary

How can one be sure that one is appreciated when one works in a bank ? The answer is by making a great deal of money for the bank. This is how the trader, Nick Leeson, became a star in the Singaporean subsidiary of Barings at the beginning of the 1990s. He made huge gains, but in fact his losses were much greater. He had found a great way of hiding the losses without anyone realising what was going on. No-one paid attention to the warning signals from outside the bank, and there were scarcely any alerts raised inside Barings. Why ? Because Leeson had made such a solid reputation for himself in the bank that no-one could possibly have imagined he was a fraudster. Such misjudgement gives us food for thought, especially since the Barings' case closely resembles the Société Générale scandal at the beginning of 2008. Is it possible to prevent fraudulent dealings ? There are many reasons to make us doubt this.

Summary translated from French by Rachel MARLIN.

Séance organisée en collaboration avec Gérer & Comprendre et avec le soutien du Club des Annales des mines

• The entire article was written by Jacques BERTHIER.

To obtain this article, you can :

• download it in French (PDF help) using your password or contact ecopar@paris.ensmp.fr (Reference VA040708).