"It was quite amazing," said one person at the meeting. "The bank was not in a position to try to dictate terms, but I think the directors of Barings just did not believe that the Bank of England would let it collapse."
The bonus payments demanded, based on the bank's operating profits last year, pushed up the figure Barings was asking from the other banks to keep it afloat. "I cannot quite reconcile the numbers," one banker is reported to have said to the Barings directors. They replied: "We are assuming the payment of bonuses in full."
The payment of a bonus pool still features in negotiations between Ernst & Young, the Barings administrators, and potential purchasers of the bank. Ernst fear there will be a mass walk-out of staff unless last year's bonuses are paid.
Yesterday the Dutch bank ABN Amro confirmed that it had teamed up with the US stockbroker Smith Barney to bid for the bank. Until yesterday Ernst had been in exclusive talks with another Dutch bank, Internationale Nederlanden Groep.
Meanwhile, the Singapore authorities, who are trying to extradite the fugitive trader Nick Leeson from Germany, yesterday produced evidence to suggest that the senior management of the collapsed Baring Brothers bank knew from the start the risks they were running.
In a letter dated 25 March 1992 discussing Mr Leeson's appointment, James Bax, Barings Securities regional managing director, wrote to Andrew Fraser, head of equities in the Baring Group in the UK: "My concern is that once again we are in danger of setting up a structure which will subsequently prove disastrous and with which we will succeed in losing a lot of money or clients' goodwill or both." The letter was disclosed at a news conference by Michael Lim of the international accountants Price Waterhouse, appointed by the Monetary Authority of Singapore as judicial manager of Barings' Singapore arm.
K Shanmugan, counsel representing the Singapore International Monetary Exchange (Simex), said that Barings' treasurer, Anthony Hawes, flew to Singapore this year to reassure Simex officials who were concerned about Barings' position.
Evidence of the letter and Mr Hawes' mission back Mr Leeson's reported claim that he did not single-handedly bring down the 233-year old bank.
Mr Fraser denied knowledge of the Bax letter yesterday. "I don't know anything about it," he said. "I can't give you any comment about it." Mr Bax hung up when contacted. Mr Hawes refused to discuss the allegations.
Daniel Hodson, chief executive of the London International Financial Futures and Options Exchange, said Liffe would review controls on futures contract trading. "We will be looking at ensuring that our own monitoring process . . . is as hard-nosed as it possibly can be to ensure that members of Liffe have the highest possible systems and standards," he said.
If Mr Leeson is extradited on forgery and criminal charges he faces a life sentence if convicted. The passports of several Barings executives are being held by the Singapore authorities.
Hidden casualties, page 4
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