Whatever happened at barings? Part one: The lure of derivatives and collapse

On 27 February 1995, Barings, one of the UK's oldest merchant banks and a well-known name, was placed in administration following the disclosure that one of its Singapore traders, Nick Leeson, had accumulated losses of over £800 million on trading futures and options contracts. Part One of this Case Study considers the scale of this disaster, placing it in the perspective of similar banking losses of recent years, as well as the damage that was caused to creditors. It reviews features of futures and options - the main financial products used in Leeson's authorised operations - as well as the kind of risks that are encountered. It also considers Barings' ill-fated corporate strategy since the 1980s.