Essay on Nick Leeson Barings Bank

5251 Words May 23rd, 2012 22 Pages
Commodities Trading: Nick Leeson, Internal Controls and the Collapse of Barings Bank __________________________________________________________________________________________

Commodities Trading: Nick Leeson, Internal Controls and the Collapse of Barings Bank

By Sam Bhugaloo

Page 1 of 21

Commodities Trading: Nick Leeson, Internal Controls and the Collapse of Barings Bank __________________________________________________________________________________________

Table of Content

Introduction.................................................................................................................................3 Background and Overview… ......................................................................…………
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For example, in the last decade of the 20th century, Sweden, Canada, Italy, and Spain were deeply in debt and faced a capital shortage; however, U.S. investors were particularly uninterested in these investment opportunities. Rather than seek out these investment venues, from 1990 to the end of 1993, American investors absorbed a net total of $127 billion in the

1 2

Joel Blau, 1999, 24. Blau, 1999, 24.

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Commodities Trading: Nick Leeson, Internal Controls and the Collapse of Barings Bank __________________________________________________________________________________________

then-robust Asian and Latin American markets. In 1993, the Philippine market increased 133 percent; at the same time, Hong Kong, Indonesia, Malaysia, Thailand, and Brazil roughly doubled. Poland experienced the sharpest increase (718 percent), but Turkey managed to gain 214 percent, and Zimbabwe also increased 123 percent. According to Blau, “Countries that were deeply in debt simply could not compete with speculative opportunities like these.” 3 As the ability to speculate increased in the last years of the 20th century, though, so did the associated risks. Blau points out that some of the major financial downturns have affected the once-great, including Hedge fund manager George Soros, who lost $600 million by betting against a

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