CHAPTER 3: BARINGS BANK COLLAPSE – OWEN GREGORY

This study analyses the collapse of Barings Bank and will demonstrate both the failure of internal controls and the problems initiated by deregulation within the financial industry. The infamous failure of the bank in 1995 was by no means the first time it had courted disaster.

In 1762 Francis Baring established a merchant bank in Mincing Lane, in the City of London, trading in cochineal, copper and diamonds. Barings Bank also became an ‘acceptance house’, guaranteeing the supplier would be paid by the buyer through the provision of Bills of Exchange.

After surviving near financial disaster in 1774 and 1787 Barings grew to become one of the finest merchant banks in Europe, even helping to broker ...

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