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Nick Leeson: the hidden account that sank Barings Bank

In February 1995, a 28-year-old trader left a note on his desk that said "I'm sorry." Days later, Barings, one of Britain's oldest banks, was gone.

Story · 7-minute read · Updated 2026-10-21

Who he was

Barings was founded in London in 1762. It was a proud old merchant bank. It had helped pay for the Louisiana Purchase, and by most accounts it counted the Queen among its clients.

Nick Leeson was a clerk from Watford, near London. He joined Barings in 1989 and moved to Singapore in 1992 to run the bank's futures desk on SIMEX, the Singapore exchange.

He was good at the job, or seemed to be. His desk reported big gains. London saw him as a star.

Here's the catch. Leeson ran the trading and the back office that checked the trading. He was, in effect, marking his own homework.

What happened

It started small. In 1992 a junior colleague made a costly mistake. Leeson hid it in an "error account" numbered 88888 instead of reporting it.

Error accounts are normal. Banks use them to park honest mix-ups for a short time. But Leeson kept this one out of the reports sent to London.

Then he started using it for his own losing trades.

His plan, as he later described it, was simple: win the money back, then quietly close the account. Each time he lost, he bet bigger to catch up. The hole grew anyway. By the end of 1994, the hidden losses are widely reported to have passed £200 million.

His main bet was that Japan's stock market, the Nikkei 225 index, would stay calm and steady. He bought Nikkei futures contracts and sold options that paid off only if the market stayed in a range.

The moment everyone remembers

On 17 January 1995, a huge earthquake hit Kobe, Japan. More than 6,000 people died. The Nikkei fell hard in the days after.

A calm, steady market was the one thing Leeson needed. It was gone.

He didn't cut the trade. He doubled down. He bought even more Nikkei futures, as if he alone could hold the market up. It kept falling.

Every day the exchange asked for more cash to cover the losses (a margin call). London kept wiring money, believing it was for client trades.

On 23 February 1995 Leeson and his wife left Singapore. He left the note: "I'm sorry."

When auditors opened account 88888, the total loss was about £827 million, around $1.4 billion at the time. That was roughly twice the bank's trading capital.

Barings was declared insolvent on 26 February 1995. On 6 March, the Dutch bank ING bought it for £1, taking on its debts.

Leeson was arrested in Frankfurt on 2 March. He was sent back to Singapore, pleaded guilty to fraud-related charges, and in December 1995 was sentenced to six and a half years in prison. He was released in 1999.

What it teaches

1. A loss you hide doesn't go away

Account 88888 began with one mistake. Hiding it felt safer than owning it. That's the whole story in one line.

On a small scale, every trader has a version of account 88888: the trade you "don't count", the loss you leave out of your journal. Write every trade down, wins and losses alike. A trading journal only works if it's honest.

2. Doubling down is not a plan

After Kobe, Leeson's answer to a losing trade was a bigger losing trade. It's the most human move in trading, and the most dangerous.

The fix is boring and works: decide your exit before you enter. A stop loss set from the chart, and a size worked out from that stop, means one bad trade stays one bad trade. See how to set a stop-loss and the position size calculator.

3. Set a limit you can't argue with

Leeson had no hard stop on how much he could lose. So there was no point at which he had to stop.

A daily loss limit fixes that for a normal trader. Ours is simple: 2 losing trades and you're done for the day. The urge to chase losses has a name, revenge trading, and it's worth reading about before you ever feel it.

4. Someone else should check the numbers

Barings let one person trade and check the trades. If you trade alone, your journal and your rules are your "back office". Review them weekly, as if someone else wrote them.

What it doesn't mean

• It doesn't mean every trader is one step from disaster. Leeson broke rules, hid records and committed fraud. That's not normal trading.
• It doesn't mean futures or options are evil. They're tools. What sank Barings was hidden risk with no limit, not the tool itself.
• It doesn't mean small accounts are safe from the same habit. The scale is different. The pattern of hiding a loss and betting bigger to fix it is the same.
• It isn't a story about one bad person only. Official reviews afterwards, including the Bank of England's report in July 1995, pointed at weak controls at Barings too.

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