Hong Kong's new giants

Chapter 566 [Collapse of Barings Bank]

Thursday, November 2.

Singapore, in an office building.

Lin Zuhui and He Changhong, vice chairman and president of Octopus Bank, are standing behind futures traders.

This is the futures and options trading department of Octopus Bank in Singapore. Although Octopus Bank is mainly a commercial bank, it inherits the business of the original China Commercial Bank; The transaction department of the bank.

In this way, the source of assets can be concealed. After all, the most you can find is Octopus Bank; and the transaction department of Octopus Bank is open to the outside world.

"How much money has been invested so far?" Lin Zuhui asked with a calm expression.

The manager of the trading department in Singapore is a foreigner named Willis. He immediately replied seriously: "Octopus Bank's own funds have been short-sold 1.2 million US dollars, and the average short-sell index is 19350 points. The Kansai earthquake in Japan After that, we have achieved 1.2 times the book profit, and the current Nikkei index is 18450 points."

Willis was calm, but excited inside.It is his honor as an investment manager to be able to communicate directly with the stock god.

Moreover, the boss's mentality is very calm. Faced with an investment of 1.2 million US dollars and a high leverage of 25 times, the boss has no demeanor at all.

Lin Zuhui asked again: "It's not normal for the earthquake to drop to this point. Either someone is backing up against the market, or the sequelae have not yet come."

As if talking to himself, Lin Zuhui actually knew that there were two reasons:
Somebody backed it up, not surprisingly, it was a Singaporean trader from Barings Bank; in his previous life, this trader single-handedly caused a famous British bank of more than 200 years to close down, setting a world record—the employee who cheated the boss most; Barings Bank let him operate like this, but this trader took advantage of the loophole of Barings Bank - the wrong bank account, bought a large number of Nikkei index futures, and directly caused a loss of 15 billion US dollars; a series of problems in this , It can be called the negative textbook of the banking industry.

So, don’t think that fuel oil treasure incidents have occurred in the Mainland, and such strange cases have also occurred in financial countries like the UK.A trader used a large amount of funds to speculate on the futures index, but the British headquarters checked several times and found no problem.

Speaking of it, Lin Zuhui asked Octopus Bank to short-sell the Nikkei this time. In addition to knowing that the Japanese earthquake would cause the Nikkei to plummet, there was also the case of the collapse of Barings Bank that reminded him—to make some money and sell Barings Bank .

Moreover, there is a trader at Barings Bank who bought more than 200 billion US dollars in "long orders" (with a margin of about 10 billion US dollars), which resulted in a huge trading volume, which can be entered.

Including the New Era Group, it also short-sold the Nikkei Index futures index of more than 5 million Hong Kong dollars.

He Changhong is also a financial elite and a banking professional, so he said: "Since the boss thinks so, then we are in a stable profit situation, and we can rest assured to wait for the Nikkei index to fall."

At this time, the futures index can be closed at any time, in the case of an opponent's order.In the absence of an opponent's order, the only option is to wait for the delivery date.

He Changhong thought that Lin Zuhui was worried, so he brought himself to Singapore for inspection.

Unexpectedly, Lin Zuhui just thought for a while, and immediately issued an order: "Continue to short the Nikkei Index, and give another 6000 million US dollars."

Everyone was shocked, the boss was serious.

Willis immediately said: "Okay, I'll arrange it right away!" After speaking, he acted immediately.

Then, Lin Zuhui asked He Changhong: "How are you preparing for overseas expansion?"

He Changhonghui reported: "After several years of development, Octopus Bank has met the conditions for overseas expansion in terms of human resources and management systems. The government of Singapore has agreed for us to open branches here. Thailand, Malaysia and other Southeast Asian countries, We are also negotiating."

Lin Zuhui nodded in satisfaction and said, "It is time to build a global financial network as soon as possible!"

The financial environment in many countries is open, which is also the result of the struggle and deception of European and American financial robbers.For example, in Southeast Asian countries, Thailand began to experience rapid economic growth in the 80s. It once considered itself a developed country, which was the reason for developing the capital market; of course, the harvest of European and American capital is also unambiguous.

To put it simply, why do European and American countries allow those countries to develop their financial markets? Because they are confident in their financial capabilities and are ahead of other countries, they wish everyone would open up; One has been playing for decades, and the other has just had a full meal, so how have you played it?

In the Asian financial crisis in the previous life, South Korea almost went bankrupt, and the IMF (International Monetary Fund) was equivalent to holding a gun and pointing at Koreans, either opening up South Korea's financial market, or the country went bankrupt.In this way, European and American capitals led by Wall Street have seized Korean industries one after another.

Of course, as long as you have money, everyone can enter the Korean market. After all, opening up is not for a certain country, but for a comprehensive opening.Therefore, Lin Zuhui can't eat meat, but there is no problem in eating a bone and drinking soup.

He Changhong always felt that the boss was pointing something, and wondered in his heart whether the boss had already found a target to acquire an overseas bank?
"Boss, don't worry, we will definitely forge ahead and develop and grow Octopus Bank!" He Changhong vowed.

Lin Zuhui nodded. Octopus Bank had made back all of its historical losses last year, and now its annual net profit has reached more than 10 billion Hong Kong dollars, which can be regarded as a leader in the banking industry.

In fact, he doesn't value commercial banking business, as long as it develops stably. After all, Hong Kong has 600 million people, so how much deposits can it absorb? What he fancyes is the ability to form a global investment banking business network, which is convenient for his own capital investment and deployment.

Barings Bank Singapore Futures and Options Trading Department.

Futures manager Nick Leeson is like a gambler at this time, buying a lot of Nikkei futures. He can get 1000 million pounds of funds from London every day.

In December last year, at a Bahrain financial achievement meeting held in New York, 12 Baring bank workers around the world regarded him as a Bahrain hero and gave him long and warm applause.

This made the ambition high, bound to make more money for Barings.

Although the Kansai earthquake caused him a lot of losses, he believes that more than ten days have passed, and the Nikkei index has not plummeted, so it will definitely bottom out and rebound.

"I'm going to make a lot of money!" Nick Leeson

A trader's voice came: "Manager, someone is short selling a lot, do you want to take the order!"

"Take it, give it to me. Next, we have 1000 million pounds a day, and the Nikkei is about to rebound. Let those fools jump off the building!"

Traders do not doubt him, but the manager is a hero in Bahrain.

Nick Leeson asked: "How many Nikkei futures, and Japanese government bond contracts do we have?"

"50000 Nikkei futures, 20000 JGB contracts," said a trader.

Nick Leeson laughed arrogantly: "Very good, the more we buy, the more we earn! After this is done, I will give you a vacation, and then go to Las Vegas to have fun for a week , one American girl per night."

"Thank you, manager!" Several traders said happily, and then started to operate like chicken blood.

Nick Leeson is not completely confident and excited at this time, but more of a kind of madness, and behind this madness is that in 1992 he set up a ' 88888' for 'Bad account'.This was originally a normal 'error account' in the operation of the financial system, recording minor errors and handling them in Singapore to avoid troublesome work in London.

It was this 'wrong account' that led to the irreversible situation today. At the beginning, because his subordinates made a mistake in the customer's transaction, he recorded this error in the 'wrong account' (concealed), and the loss was 2 pounds; A friend also made many mistakes, which he recorded in the 'error account'.

But there are at least three problems bothering him: first, how to make up for these mistakes; second, how to evade the internal audit of the London headquarters at the end of the month after recording the mistakes into the "88888" account; third, SIMEX requires them to add margin every day, and they will calculate How much does the Singapore branch lose every day?

In order to make up for the mistakes of his employees, Leeson transferred the commissions he earned into the account, but the premise is of course that these mistakes should not be too big, and the amount of loss caused is not too big, but the mistakes caused by George are indeed too big.In order to earn enough money to compensate for all losses, Leeson took more and more risks. He was engaged in a large number of straddle position transactions at that time, because the Nikkei index was stable at that time, and Leeson would earn option premiums from more transactions.If you are unlucky and the Nikkei index fluctuates sharply, this transaction will cause Bahrain to suffer great losses.

In this way, he began to fill in holes, and began to make fake checks to pay the London headquarters, and finally came to this point.

"I've made a lot of money this time, so I'll stop!" Nick Leeson thought after calming down.

Beginning in mid-February, the Nikkei began to continue to fall sharply.

On February 2, the Nikkei stock price index fell sharply, 23 points, to close at 276.6 points.

On the same day, Nick Leeson finally realized that he could not make up the loss, so he was forced to flee in a hurry.

At this time, the Singapore trading department of Barings Bank held more than 6 long contracts of futures index, and faced with the rise of Japanese government bonds, it also held more than 26000 short contracts. Then it surged to a staggering £8 million.

The bankruptcy of Barings Bank has become a foregone conclusion.

On the morning of February 2, Lin Zuhui learned that at 27:9 last night, the Bank of England, the central bank of England, had no choice but to announce the bankruptcy and liquidation of Barings Bank without any other rescue plan, looking for a buyer. take on debt.

At the same time, the London Clearing House stated that after consultation with relevant parties, it will treat Barings Bank as insolvent, and in accordance with the power conferred by relevant laws, it will close the open positions of Bahrain's own contracts and the open positions of its agency customers. The contract is transferred to other members for processing.

Lin Zuhui knew that the opportunity had come!

Barings Bank was founded in 1763 by Sir Francis Barings. Due to its flexibility and innovation, Barings soon achieved great success in the international financial field.Its business scope is also quite extensive. Whether it is refining copper ore in the Congo, trafficking wool from Australia, or digging the Panama Canal, Barings Bank can provide loans.

Barings Bank is different from ordinary commercial banks. It does not develop ordinary customer deposit business, so its source of funds is relatively limited. Its business expertise is corporate financing and investment management. In the 90s, it began to develop overseas and carried out extensive investment activities in emerging markets. In 1994 alone, it opened offices in China, India, Pakistan, South Africa and other places. The business network is mainly in emerging countries and regions in Asia and Latin America.

What Lin Zuhui lacks is an investment bank like Barings Bank. If he is included in the Octopus Financial Group, he will be equivalent to extending his financial tentacles to all parts of the world.

Therefore, he quickly decided to lead the team to go to the UK to buy Barings Bank.

He knew that Barings might only be worth £1, but it might need an injection of more than $10 billion.

But this time Octopus Bank earned almost US$10 billion on Nikkei.

In less than three months, it's a good deal to pick up a company that has been around for hundreds of years.

Of course, there may be competitors, but it’s okay to try!
Even if the acquisition fails, at least 10 billion US dollars can be earned!

On the same day, Lin Zuhui's private plane took off from Xiangjiang and headed towards London.

On the plane were senior executives from the Octopus Financial Group, as well as foreign financial aid such as Yuan Tianfan and Liang Botao.

(End of this chapter)