BARINGS BANK
Introduction- Barings Bank was a British merchant bank based in London, and one of
England's oldest merchant banks after Berenberg Bank, Barings' close collaborator and
German representative. It was founded in 1762 as the John and Francis Baring Company by
Sir Francis Baring, 1st baronet, with his older brother John Baring as a mostly silent partner.
They were sons of John (né Johann) Baring, wool trader of Exeter, born in Bremen,
Germany.
Barings Bank Acquisition
The Dutch bank ING Group, purchased Barings Bank in 1995 for the nominal sum of £1.00,
assuming all of Barings' liabilities and forming the subsidiary ING Barings. A few years
later, in 2001, ING sold the U.S.-based operations to another Dutch bank, ABN Amro, for
$275 million. ING's European banking division absorbed the rest of ING Barings.
The Barings name lived for a while in only two divisions, both of which were subsidiaries of
other companies. Baring Asset Management (BAM) is now part of MassMutual. BAM's
Financial Services Group became part of Northern Trust until taken private in 2016.
Problems-
1. HR department-Failure to properly vet and supervise employees, including Nick
Leeson, as well as inadequate training and development programs, contributed to the
bank's inability to detect and prevent fraudulent activities.
2. Finance: Mismanagement of funds and inadequate risk management practices led to
significant financial losses, particularly due to unauthorized speculative trading by
Nick Leeson.
3. Operations Department: Weaknesses in operational controls and procedures allowed
Leeson to conceal his trading losses through fictitious accounts and misleading
reports, exacerbating the magnitude of the losses.
4. Legal Department: Inadequate legal oversight and failure to enforce compliance with
regulatory requirements and internal policies allowed fraudulent activities to go
undetected.
5. Strategic Department: Lack of strategic foresight and failure to implement robust risk
management strategies contributed to the bank's vulnerability to financial risks and
market fluctuations.
6. Marketing: Ineffective marketing strategies may have contributed to a lack of
transparency and accountability within the organization, impacting stakeholder
confidence.
7. Sales: While sales activities may not have directly contributed to the bank's failure,
ineffective sales practices may have hindered efforts to attract new clients or diversify
revenue streams.
8. Technical Department: While technological factors may have played a role in
facilitating fraudulent activities, the direct impact of the technical department on the
bank's failure may be relatively lower compared to other departments.
9. Research and Development: Lack of emphasis on research and development may
have contributed to the bank's inability to innovate and adapt to changing market
conditions, but its direct impact on the failure may be limited.
10. Logistics: Logistics-related issues likely had minimal direct impact on the bank's
failure compared to other factors such as finance and operations.
11. Public Relations: While maintaining a positive public image is important for any
organization, the direct impact of public relations on Barings Bank's failure may be
relatively lower compared to other departments.
