The Peter McCormack Show — Episode #117

Guest: Nick Leeson

Title: “I Lost £862 Million and Collapsed a Bank”
Date: October 1, 2025

Overview

In this deeply candid episode, Peter McCormack sits down with Nick Leeson—the man whose unauthorized trades brought down Barings Bank in 1995, causing a loss of £862 million. Leeson recounts the harrowing spiral from a humble council estate in Watford to being one of the most infamous figures in modern financial history. Together, they explore the factors behind the collapse, the chaos of the trading floor, failures of oversight, psychological pressures, and the aftermath—including prison, rebuilding life, and family. Throughout, both host and guest engage with humor, empathy, and brutal honesty, drawing parallels to today's finance and crypto worlds.

Key Discussion Points & Insights

1. Nick Leeson’s Early Life and Career Origins

• Leeson's Background: Raised on a council estate in Watford, motivated by classic working class ambition, pressured for success by his mother.
  • “I grew up around Watford, grew up on a council estate… my mum would have always wanted me to do better than she had.” — Nick Leeson [02:55]
• Early Schooling: Strong at maths until a lack of proper teaching led him to fail his A-level, eliminating his university plans.
• Entry into Banking: Joined Coutts & Co by chance, later moving to Morgan Stanley and then Barings, with each step coinciding with the “Big Bang” era in the City of London.
• Early Warning Signs: Notorious lack of structure and management at Barings compared to previous employers.
  • “Barings was, you know, a lot of it was, you know, by the seat of your pants sort of stuff.” — NL [09:29]

2. How the Losses Began: Trading and the Culture of the Pit

• Start in Arbitrage: Tasked with trading Nikkei 225 futures between Tokyo and Singapore—an “arbitrage” job meant to be low risk.
  • “I was supposed to arbitrage between Singapore and Tokyo… buy in one location, selling the other.” — NL [12:19]
  • Peter relates to crypto traders who are familiar with exchange price differentials. [12:43]
• Pit Trading Dynamics: Old-school, hand-signal chaos; errors could happen quickly and needed rapid reconciliation.
  • “You both write out a little ticket… you’ve got to resolve those discrepancies within a 30-minute period.” — NL [17:04]
• First Loss: A £10,000 loss was the trigger; instead of “cutting” (closing) the loss as required, Leeson doubled down, driven by fear of failure.
  • “I’ve always had a huge fear of failure… success was the thing that motivated me and failure was always the one thing that I just couldn’t countenance.” — NL [22:35]

3. From Mistake to Catastrophe: The Spiral of Losses

• Doubling Down: Initial error ballooned as instead of admitting loss, Leeson increased the size and complexity of trades, often to “hide” previous losses.
  • “You described very well the position that I was in. I just didn’t do it four times. I probably did it 400 times.” — NL [45:19]
• Chasing Losses: Psychological descent into a gambler's mindset, losing perspective on the scale of losses as numbers grew.
• Accumulation Over Years:
  • £10k → $5m by Sep ‘92 → $20m by May ‘93 → Brief recovery (“got it all back”) → Losses resumed.
  • “By September of ‘92, it’s up to $5 million. So it’s accelerating quickly.” — NL [24:38]
  • “By late ‘93, early ‘94, I was probably 50% of the market.” — NL [27:47]
• The Point of No Return: Leeson often had half the market’s exposure, market volatility meant losses increased at a rate neither he nor the bank could sustain.

4. Why No One Stopped Him: Failures of Oversight & Control

• No Checks and Balances:

  • “At Barings, nobody did that position check for two and a half years.” — NL [28:04]
  • “If a position didn’t agree, the trader wasn’t allowed to trade until it did.... At Barings, nobody did that.” — NL [28:04]

• Auditor and Management Failure:

  • “Deloitte’s have just walked in the door, they’re going to do the year end audit.” — NL [31:48]
  • Auditors discovered a multi-million discrepancy but dismissed it as a “timing difference.”
  • Reliance on Leeson for explanations allowed consistent obfuscation and continued fraud, reinforced by organizational silos and lack of communication.

• The Confidence Trick:

  • “A lot of it was a confidence trick… as long as I was confident about what I was saying, they tended to accept it.” — NL [52:24]

Notable Quote

“There are simple checks and balances that should have exposed it, but just nobody was doing them.” — Nick Leeson [28:04]

5. The Collapse: The Final Days at Barings

• Mounting Demands for Cash:

  • "By the beginning of 1995, I was asking London for £650 million, which they’d given me.” — NL [26:24]
  • “They were borrowing the money in order to feed me in Singapore… that meant that if I, and I’ve met a guy… he’d say to me, ‘You can’t do that, we haven’t got any money left. It’s all in Singapore.’” — NL [48:23]

• Bank (and Regulator) Failed to Act:

  • “Every single day the treasurer has to send that [money transfer report] to the Bank of England… and when they asked what he was doing with those reports, his response is it was too far down in his in-tray.” — NL [54:14]

• The Moment of Discovery:

  • Tony Railton from London finally reconciles the accounts and confronts Leeson with an inexplicable shortfall.
  • “A plus B doesn’t equal C. Explain why it doesn’t equal C.” — Tony Railton to Leeson [00:00 / 55:56]

Leeson’s Reaction:

“I didn’t. I ran away.” — Nick Leeson [56:17]

6. On the Run and Arrest

• Flight from Singapore:
  • Details his escape to Kuala Lumpur, then Borneo, learning of the bank’s collapse on his birthday via the Asian Wall Street Journal. [60:39]
• Arrest in Frankfurt:
  • Surreal journey through multiple airports, seeing his face on every monitor and newspaper: “It’s just unbelievable.” — NL [65:03]
  • Arrested with wife for supposedly using false passports, ultimately extradited to Singapore after 9 months in German prison.

7. Prison, Reflection, and Aftermath

• Imprisonment:

  • “So I was extradited back to Singapore… four years, four months. You get a third off for good behavior.” — NL [67:13]
  • No sense of “relief” upon being caught; deeply anxious and fearful, especially in the dangerous confines of German prison.
  • “Absolutely, no, I’m shitting myself.” — NL [68:25]

• Reflection:

  • “You take a long hard look at yourself and you have to be really honest with yourself about things that happened… and you make changes.” — NL [71:05]
  • Loss of prospect for traditional business success; focus shifts to family, self-worth, and honesty.

• Compensation and Legal Repercussions:

  • Leeson received no financial benefit; proceeds from book and interviews seized by liquidators.
  • “If I earn any money, they’re entitled to it, up to £100 million.” — NL [82:22]
  • Rekindled life by public speaking, some media, and studying psychology after release.

• Impact on Others:

  • Most Barings retail and institutional clients recouped their funds; ING bought Barings and retained most staff.
  • Real damage done to colleagues’ personal careers, especially key executives like Peter Norris.
  • Reunion with former colleagues was emotionally difficult: “You could see the damage that did to Peter. And that was difficult to take.” — NL [77:02]

8. Fatherhood, Legacy, and Moving On

• Personal Growth:
  • Now values being a parent over material success; finds pride in his children’s character and achievements.
  • “A lot of my success these days comes from being a parent and looking at how my children are doing.” — NL [72:11]
• Relationship with the Past:
  • Mentions days go by without thinking about Barings; primary focus is on family, not reputation.
  • “None of it hurts anymore.” — NL [86:51]
• Advice to Next Generation:
  • Open with children about past; emphasizes doing the right thing and asking for help.
  • “Always do the right thing, right? If you find, if you’re struggling with something, come and ask me… I’m always going to be there to help you.” — NL [89:53]

Notable Quotes & Memorable Moments

• On Avoidance:

  • “If you’ve got somebody chasing you for money… you might get the letter in the post and you throw it in the bin without even looking at it because you know what it’s going to say.” — NL [29:32]

• On Organizational Failure:

  • “Nothing was followed up… Bit like, to bring it into the crypto world, bit like FTX.” — NL [51:29]

• On Being a Good Trader vs. a Gambler:

  • “I’m sure you’re now not a trader, you’re a gambler.” — Peter McCormack [40:24]

• On Parenting:

  • “I think you use those things to empower your children.” — NL [89:53]

• Comic Relief:

  • “Did you get a bonus?” — Peter McCormack [73:25]
  • “No. We can get there if you want. But, yes—a sore point, I know… No, I’m joking.” — NL [73:26]

Timestamps for Important Segments

• Nick’s Early Life & Ambition: [02:55–06:55]
• First Steps in Banking / Barings Culture: [06:55–10:57]
• How the Trading Losses Started: [12:05–14:00]
• Pit Trading Explained: [16:44–18:47]
• First Loss & Psychology of Chasing: [19:13–23:52]
• Spiral of Losses & Doubling Down: [23:52–27:47]
• How Was No One Stopping This?: [28:04–31:47]
• Auditor Misses & Covering Up: [31:47–35:37]
• No One to Confide In: [35:35–37:00]
• Market Turns, All Is Briefly Forgiven: [39:58–41:28]
• Why Barings Collapsed: [51:29–56:02]
• The Run and Arrest: [57:59–67:04]
• Prison & Life Reflection: [67:05–71:05]
• Consequences for Self & Others: [73:01–77:02]
• Family and Legacy: [86:39–93:33]

Final Thoughts & Tone

Throughout the conversation, Leeson and McCormack maintain an open, sometimes irreverent, yet always honest tone, making space for laughter amid hard truths. Leeson is forthright about his responsibility, the absence of oversight that enabled him, and the devastating ripple effects—not least on himself, his colleagues, and his family. He’s moved from defining himself by business “success” to centering his life around parenting and integrity. The discussion is as much a lesson in human frailty and institutional failure as it is a captivating story about high finance gone horribly wrong.

“There are always warning signs… but nobody sees them until it’s too late. If I’d been checked—if there’d been proper controls—it would have stopped. Instead, the hole got deeper and I just kept digging.” — Nick Leeson

Episode prompts a Part Two, covering 2008 crisis, prison with cancer, and more reflections.