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Banking Essay Example | Topics and Well Written Essays - 2500 words
Banking - Essay Example ing overtaken by Dutch giant ING for a measly sum of Ã £1, and exposing the risky environment in which equity corporations scale catastrophic limits in order to make a quick profit. At the heart of the devastating scam was a person with a huge appetite for risk-taking but hardly any accountability towards the bank, Nick Leeson. Overnight, the unscrupulous futuresÃ¢â¬â¢ trader from London who was previously the poster boy for BaringsÃ¢â¬â¢ high-growth earnings from SingaporeÃ¢â¬â¢s premium monetary exchange, SIMEX (In 1993, he documented nearly 10% of the bankÃ¢â¬â¢s profits in futuresÃ¢â¬â¢ trading), took special advantage of the bankÃ¢â¬â¢s vulnerability in not being able to hedge the risks that come with dealing in a concern as sensitive as this. This is what happened. Nick LeesonÃ¢â¬â¢s job as Chief Trader at SIMEX was to buy and sell the simplest kind of derivatives pegged to the Nikkei-225 stock exchange of Japan. This job entails the methodology of a skilled bookie who basically, bets on what people are likely to bet on in the future course. Despite booking profits on various occasions, some of LeesonÃ¢â¬â¢s predictions proved incorrect. The idea to fool the bank management in covering up details of unsuccessful tradings came from devising an unaudited bank account, called error account 88888, to fix Ã £20,000 goofed up by an inexperienced team member, which was later to serve as LeesonÃ¢â¬â¢s personal getaway in covering up failed investment strategies. Even as the entire audit team of BaringsÃ¢â¬â¢ was kept in dark about what was the tip of the iceberg then, Leeson managed to document account losses which were initially at Ã £2 million in 1992 to an astronomical figure of Ã £208 million by 1994. The final blow