Two explanations for the collapse of Barings: incompetence in trading coupled with the looting of the bank by its managers

Purpose This paper is a qualitative historical case study examining the various factors that led to Barings’ bankruptcy with a focus on the criminal conduct identified by the courts, government reports, the media, etc. Design/methodology/approach This historical case study is based on a lecture of : Nick Leeson’s autobiography (1999), The report of the Bank of England; The press; and academic research. Our theoretical framework draws upon: Agency theory (Jensen and Meckling, 1976); research on control fraud; and the theory of corporate looting. Findings This paper argues that Leeson was not a thief, but rather an impostor. The analysis of Barings remuneration policy suggests a case of corporate looting by its own managers: a situation in which the manager extracts more value from the company than it can objectively provide given the wealth. Originality/value Three theories are put forward to explain the collapse of Barings: The exactions of a “rogue trader,” a failure in management control, coupled with the incompetence of Barings’ managers. In a context of financial market liberalization, financial market authorities became powerless. This paper argues that Leeson was not a thief, but rather an impostor. The analysis of Barings remuneration policy suggests a case of corporate looting by its own managers.

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Publication Details

Journal
Qualitative Research in Financial Markets
Published
2026-10-28
DOI
https://doi.org/10.1108/qrfm-05-2026-0243
Primary Topic
finance, banking, and market dynamics
Type
article
Field-Weighted Citation Impact
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Two explanations for the collapse of Barings: incompetence in trading coupled with the looting of the bank by its managers

Thierry Suchère
Qualitative Research in Financial Markets
finance, banking, and market dynamics
article

Two explanations for the collapse of Barings: incompetence in trading coupled with the looting of the bank by its managers

Thierry Suchère
article en

Abstract

Purpose This paper is a qualitative historical case study examining the various factors that led to Barings’ bankruptcy with a focus on the criminal conduct identified by the courts, government reports, the media, etc. Design/methodology/approach This historical case study is based on a lecture of : Nick Leeson’s autobiography (1999), The report of the Bank of England; The press; and academic research. Our theoretical framework draws upon: Agency theory (Jensen and Meckling, 1976); research on control fraud; and the theory of corporate looting. Findings This paper argues that Leeson was not a thief, but rather an impostor. The analysis of Barings remuneration policy suggests a case of corporate looting by its own managers: a situation in which the manager extracts more value from the company than it can objectively provide given the wealth. Originality/value Three theories are put forward to explain the collapse of Barings: The exactions of a “rogue trader,” a failure in management control, coupled with the incompetence of Barings’ managers. In a context of financial market liberalization, financial market authorities became powerless. This paper argues that Leeson was not a thief, but rather an impostor. The analysis of Barings remuneration policy suggests a case of corporate looting by its own managers.

Qualitative Research in Financial Markets
Université Le Havre Normandie (FR)
Peace, justice, and strong institutions
Openalex Percentile: Top 9%
finance, banking, and market dynamics
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