Have you heard of the story of Barings Bank? Founded in 1762, this was the oldest merchant bank in the United Kingdom. A century-old institution that had its Legacy shattered thanks to one person: Nick Leeson, one of his employees.
The young man, at first, proved to be a prodigy. At the age of 25, he was already managing international and high-risk contracts and became known as a “genius of investment“.
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Detail: he was even responsible for around 10% of the bank's profits.
However, the situation became very complicated. The problem was that Nick never listened to the advice of Uncle Ben, from the movie “Spider man“; he didn’t know that “with great power comes great responsibility.”
Dangerous ambition
What happened is that they gave too much confidence to a person who was still inexperienced. After all, Nick reviewed his own operations and there was no internal control over what he did.
Although some colleagues warned management about the young man's risky investments, no one worried about it. After all, he was considered a prodigy.
Nick's dangerous ambition led him to open account 88888 — a number said to bring luck in Asian culture — an account to mask financial mistakes.
(Image: disclosure)
It started small
The first idea was to hide a relatively small loss, £20,000. However, Nick lost control with his high-risk investments. As he risked more, the deficit also grew.
At the end of 1992, there was a negative balance of US$2 million. Just imagine!
Nick, however, managed to turn the game around and balanced the value. After the slip-up, he swore he would never use the account again. However, the desire to earn more money and grow at the bank spoke louder.
Not only did he use it again, but the losses became even greater, even though he presented million-dollar profits to the Barings Bank board.
The House fell
The situation only collapsed once and for all in 1995. Nick made a mega risky investment that depended heavily on the stability of the financial market. However, he did not have a earthquake in Japan, which caused the market to even lose its way home.
Trying to recover, the young man bet big that Tokyo's shares would recover. But that didn't happen. So he fled, leaving only a note that said “I'm sorry”.
When they discovered everything, account 88888 had a negative balance of £857 million. This was equivalent to more than double the bank's market value. He didn't do anything else: the bank had to declare bankruptcy.
Escape and capture
Nick Leeson managed to evade the police for 272 days. He was arrested in Frankfurt, Germany. The boy was then extradited to Singapore, where he was sentenced to prison.
He served his sentence, but was released six years before completion as he was diagnosed with cancer.
Graduated in Social Communication from the Federal University of Goiás. Passionate about digital media, pop culture, technology, politics and psychoanalysis.