Nick Leeson: Banks have not learned lesson

NICK LEESON said the revelation that a single trader lost €4.9 billion at French bank Societe Generale proved financial institutions had not learned their lessons.

The original rogue trader caused the collapse of Barings bank in 1995 after costing the group about £800 million (€1,080m).

He told BBC News 24: “The first thing that shocked me was not necessarily that it had happened again — I think rogue trading is probably a daily occurrence among the financial markets.

“The thing that really shocked me was the size of it.

“There are occasions when these sort of scandals will occur in different banks and in different financial institutions but I never for one minute thought that it would get to this degree of magnitude and this degree of loss.”

He accused the banks of focusing on making money, at the expense of risk management.

“The money gets thrown at the front end of the business where the money is being made, at the traders and at the systems that they are trading with. They are looking at advancing and improving those all of the time.”

Mr Leeson said SocGen was at the “cutting edge” of the derivatives markets but management would have been “totally divorced from what was going on” in terms of the fraud.

“It’s incompetence, it’s negligence of a very high order.”

He said the trader, like himself, was likely to have been driven by the desire for success, rather than wanting to get rich quick.

“Your wife and your family get sucked into that success story. They’re propelled along with it.

“Sometimes it’s those people that are the most difficult people to tell.”

Mr Leeson, a Watford schoolboy-turned-City whizzkid is now commercial director at Galway United football club.