ON SUNDAY, February 26, 1995, the banking world was stunned by the announcement that Barings Bank, Britain's oldest merchant bank, had collapsed. Barings owed £827 million on financial derivatives contracts, but the bank's entire assets amounted to little over £540 million. Barings' exclusive clientele, which included the British Royal Family, stood to lose all the money they had invested in the bank. The fact that one trader at Barings' Singapore office had accumulated the losses revealed the bank's lack of effective internal controls, and undermined confidence in the “gentlemanly” capitalism practiced by traditional merchant banks.

Barings History

Founded by Sir Francis Baring in 1762, Barings Bank was Britain's oldest merchant bank and had financed the Napoleonic Wars, the Louisiana Purchase, and the construction of the Erie ...

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