FINANCIAL MARKETS

BARINGS
TYPICAL EMPLOYEES
BB&Co.
 It’s a old style merchant banking company
 Typical employee would have been educated at Oxford or

Chetan GK, MDI-M

Cambridge Universities.
 Elite club

BSL
 Typically young and coming from working class
background.
 Earning more than the parents.
 Works hard.
 Intensely competitive and constantly measuring the
performance against colleagues. 2
 Status of the employee measured by how much profits an
employee makes as the company has generous bonus
NICK LEESON’S BEHAVIOR
 Leeson badly wants to be a trader

 Traders were considered to be kings at BSL.

Chetan GK, MDI-M

 Making more money as trader is considered to be
divine thing and bonus was tied up based on the
performance.

 Legitimate way to make money was to indulge in

arbitrage. Leeson felt that one can make money by
doing unauthorized trading.
 Hence he quickly moved up to the ladder from back
office clerk to star performer as a trader.
 He perceived that one can alone influence the market 3
for longer time frame and that’s why he started
buying SIMEX index.
MATRIX MANAGEMENT AND COLLAPSE OF
THE BARINGS BANK
 Matrix structure works best with a team culture.

 Conflicting objectives and argumentative

Chetan GK, MDI-M

environment should not be there.

 Leeson was both responsible for back end and back

office operations at BFS.

 Data canceling in account 88888 was sent daily to

London.

 It was dumped into the suspense account because the

account number was not on the computer master file.
 4
 Computer system allowed selectively sending the
data to London.

Chetan GK, MDI-M

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