Barings

John Gapper

Lehman Brothers collpsed in 2008. Getty Images

The demise of London’s merchant banks, which were sold to US and European banks in the mid-1990s after the collapse of Barings in 1995, showed they could no longer exist in the modern world of finance.

Was the US much different, though? Looking back at the 2008 financial crisis, the collapse of Lehman Brothers had roughly the same effect on the Wall Street investment banks as the collapse of Barings in 1995. Read more

John Gapper

The most breathtaking aspect of Jon Corzine’s prepared testimony to a Congressional committee on the collapse of MF Global is his claim to know little about clearing and settlement.

Mr Corzine’s defence for the missing funds at the commodities broker that he formerly headed is ignorance – that while he knew quite a lot about trading, he left the back office responsibilities to others.

He thus did not know about the missing funds at MF Global until the Sunday night of the weekend when he was trying to strike a deal to rescue the firm. Read more

John Gapper

Given the recent history of UBS, it is fair to ask if Kweku Adoboli is a rogue trader or his employer is a rogue bank.

At one level, Mr Adoboli might appear to fit neatly into the stereotype of the rogue trader, a phenomenon that recurs so often that it is an endemic aspect of modern investment banking. He is young, fairly junior and works on a desk that combined proprietary position-taking with “flow trading” in customer orders.

The latter has in the past allowed rogue traders such as Nick Leeson of Barings and Jérôme Kerviel of Société Générale, to conceal losses while appearing to be doing what their employers wanted. Mr Adoboli has been arrested but not charged, let alone convicted, so he has the presumption of innocence. Read more