This website uses cookies to ensure you have the best experience. Learn more

Case Study The Collapse Of Barings Bank

883 words - 4 pages

Case study- The Collapse of Barings Bank
1. What was Nick Leeson’s strategy to earn trading profits on derivatives?
The play here was very simple – trading futures on the Nikkei 225 as the underlying. The Nikkei 225 was traded as a future on both the SIMEX and the Osaka markets. There were always known to be differences between the two markets which could be arbitraged. The idea was to exploit the differences between the 2 markets , and execute in the cheaper market on client orders. This would then allow Barings to net a profit as they execute in the cheaper market but quote the client the price in the more expensive market. The underlying idea was of course to always be long one and ...view middle of the document...

This is where he created the infamous error 88888 account. An error account per se is quite normal; it is used by brokers to to book small small intraday errors which are then settled at the end of the day. Leeson started to use this error account to engage in cross trading (the process of netting trades within the same counterparty). Trades would be booked as normal into regular accounts, however by the end of the day the trades would be crossed with the error account and essentially the risk transferred out. He also booked the trades with false prices so that profits would be shown on trading in the accounts that were being reported to management. Leeson made sure that error account 88888 was excluded from management reports. This meant that the management in London never saw the true picture of the size of positions that Leeson was taking. In fact they naively believed that their golden boy was making them huge profits, so they let the show go on.

4. Why did Barings and its auditors not discover that the error account was used by Leeson for unauthorized trading?
Barings and its auditors did not catch on, in time, to what Leeson was up to because its management failed to institute a proper managerial, financial and operational control system. Barings failed to ensure that there was adequate segregation between various functions of the Singapore operations in that way undermining the effectiveness of any controls that would have been put in place. Leeson was in charge of -the dealing desk and also had control over the back...

Other Papers Like Case Study- the Collapse of Barings Bank

Macquarie Bank Case Study

1201 words - 5 pages Exercise: 1 – 7th Class of OSD Macquarie Bank Case Study Macquarie Bank is an excellent example of a highly successful organization, which has been able to maintain its success using an incremental adjustment process while operating in a rapidly changing environment. During the 1980s and 1990s, changes occurred in the environment of Australian financial institutions. These included rapid deregulation of the financial services sector by

Shinsei Bank Case Study

1748 words - 7 pages Shinsei Bank’s current organizational structure and culture reflect the effects of several defining moments in the bank’s history. When its original incarnation, the Long-Term Credit Bank of Japan, failed in 1998, it set in motion a series of paradigm shifts for the bank. First, the bank was sold to a US private equity group, Ripplewood. This was controversial as, per the case material, “corporate Japan loathed private equity groups, and the

Mountain Bank A Case Study

1196 words - 5 pages Assignment #1 Business Strategy Strayer University HRM530 Section 016 April 23, 2011   Mountain Bank A Case Study I. I would recommend that Mountain Bank implement the following competitive strategy for the reasons given: a. Mountain Bank should follow the differentiation strategy. i. Mountain Bank should follow this strategy because few organizations can successfully use the cost leadership strategy. One problem with a cost

Case Study: Shenzhen Development Bank

638 words - 3 pages consideration of this deal. In such a case, we should refer to other price-to-book multiples of similar deals over that period. According to the data given in the case (as shown in Figure 1), these China banks had also received foreign investment and their deals had multipliers of 1.2-1.5 times. Given their similarity, the multiplier of 1.6 times is appropriate for the SDB deal. Figure 1 Date | Foreign Investor | China Bank | % Stake

Jyske Bank Case Study Report

1199 words - 5 pages Q1. What is JYSKE bank’s new positioning or competitive differentiation strategy? Ans1.) JYSKE bank’s new positioning strategy basically has been developed to reconstruct themselves as a customer oriented, customer centric bank. Their new differentiation strategy basically consists of four components. 1. Out of the Box service: They began to think out of the box and this led to them targeting specific segments of customers and thus

Bank of America Case

1302 words - 6 pages Problem Statement Bank of America is struggling to position their mobile banking service in the continuously changing industry. The bank already has a mobile application but is evaluating if they should add more features to this app and how this will affect their clients. Situation Analysis Company • Bank of America is the largest U.S. bank holding company; it was founded in 1904 and expanded with several acquisitions. • By the end of

Collapse of the Ussr

1087 words - 5 pages Why factor that cause the collapse of the USSR? On Christmas Day on 1991,Mikhail Gorbachev resigned as the president of USSR and announced that USSR from then on was not going to existed anymore. Except the US president Reagan, very few people predict the collapse would happened. Evidences prove that the break-up of the USSR was intended and also out of Gorbachev’s expectations. After Brezhnev died. There were lots of problems left to

A Study On Commercial Banks In Kenya, Case Study Cooperative Bank Of Kenya

1814 words - 8 pages services to the co-operative movement, the Government considered the idea of setting up of a co-operative bank. It is deemed necessary to conduct a survey to ensure the bank is set on sound footing. As a result of initiative and advice of KNFC, a group of people from the Department of Co-operative Development visit Israel to study ways and means of establishing a viable co-operative bank. The same year, a joint paper by the Ministry of Finance

Study the Case of Wolfgang

2795 words - 12 pages Study the Case of Wolfgang's Balancing Act International HRM ‘Wolfgang’s Balancing Act’ Case Study   Task 1 Cultural contingencies that shape employee behavior in Healthcare As the world becomes more interdependent, the business and the process of doing business are exposed to many, continuously changing dimensions, structures and opposing forces. In a global environment, culture is a critical factor whereby the process of advancing

The Irac Method of Case Study Analysis

787 words - 4 pages The IRAC Method of Case Study Analysis LAW/531 April 27, 2014 The IRAC Method of Case Study Analysis Facts In the case of Martha Bull, 76, against Greenbrier Nursing and Rehabilitation Center, negligence was found in her death. Ms. Bull was admitted to the center for rehabilitation after a stroke. On the night of April 7, 2008 there was an order to have her sent to the emergency room; however, there was oversight and the order was

Act of the Shipper Case Study

959 words - 4 pages Dominique Lofton The Exceptions: IV- Act of the Shipper case study My case study will be over the act of the shipper that is discussed in chapter 9. It brought up some very interesting information on who is, or will be held liable if any damages, loss, and delay happens to the freight. So when it’s an act of the shipper the carrier will not be held liable. I will give you examples and also discuss when the act of a shipper reduces a carrier

Related Essays

Case Study: Bank Of America

834 words - 4 pages Case Study: Bank Of America  How it learned that what customers really want is to Keep the Change  THE PROBLEM  Innovation in services is rare. In financial services, the last big breakthrough was online banking, nearly a decade ago. In October, 2005, Bank of America (BAC ) brought out a radically different product that broke the paradigm. It's called Keep the Change.The cocept solves a critical banking problem -- how to get consumers to

Care Group It Case Study: The Network Collapse

1931 words - 8 pages The CareGroup Case Study was comprised of various components. The core concepts were broken down into the history of CareGroup itself, CareGroup’s IT, the collapse of the network, dealing with the collapse of the network, and the lessons learned from the entire situation (McFarlan, F. Warren, and Robert D. Austin, pg.1). CareGroup was formed on the basis of three major Massachusetts hospitals; Beth Israel, Deaconess, and Mount Auburn (McFarlan

Case Study The Overpaid Bank Teller

663 words - 3 pages The Overpaid Bank Teller Human Resource Management 1. If you were on the bank’s HR Committee, what would you do regarding raises for the tellers? I think first of all the State Bank should not base their wages off of a wage survey conducted by a competitor. Utilizing a third party to conduct a wage survey before making such a decision would be a much better option. I also think that lowering the raises that the teller will

Jyske Bank Case Study

1040 words - 5 pages Case Study #1: People, Service, and Profit at Jyske Bank Michael Cox MBAC 633-01 September 4,2014 Michael Cox MBAC 633-01 09/04/2014 People, Service, and Profit at Jyske Bank 1. Jyske Bank’s core values are rooted in treating its "three groups of stakeholders-shareholders, customers, and employees-with equal respect.” Jyske bank does this through: Common Sense, Being Open and Honest, Being Different and Unpretentious