Gareth Jones, an executive director who heads Abbey's treasury services division, said Barings had failed to make basic routine checks. "All this business of people not knowing was absurd. It was entirely their own fault if they did not know. If we can make checks I am sure they are capable of making them."
He added: "They obviously failed to get daily reports from the Singapore Monetary Exchange as to what transactions were being made. This is something we do as routine. It is a tragedy what has happened to Barings. The business was basically sound."
An Abbey board member said: "Barings' controls were applied neither in London nor in the Far East."
Abbey National had a joint venture with Barings in derivatives that began in October 1993. Abbey said it had used a clause in the agreement to take over full running of the profitable business.
Abbey National confirmed that it had no exposure to Barings. Abbey said its branches had been inundated with concerned customers inquiring about the Barings crash but had been able to calm their fears.
"Our derivatives business is interest swaps and options not equities," chief executive Peter Birch said. "We're not involved in the Nikkei."
The inadequacy of the controls was being blamed by Barings insiders in part on rivalry between the securities and banking sides of the business, and incomplete efforts to bring them under one management roof. This added to the confusion over who was meant to be controlling Nick Leeson.
Barings was still in the process of combining the two different parts of its operations, which left Mr Leeson in the anomalous position of being formally part of securities but reporting to banking, with the lines of communication unresolved.
"In the process of reorganisation, the reporting lines appear to have become more than a little blurred," a Barings executive commented yesterday.
As part of its reorganisation, Barings had produced in mid-1994 an internal report on the Singapore office - one of the highly profitable centres in the bank's Far East operations - that identified weaknesses in local control systems. One question raised was that Mr Leeson was permitted both to deal and to do the book-keeping on these trades, a doubling of roles which was at odds with basic banking control practice.
It is believed that suggestions in the report to tighten these procedures in the Singapore operation were never implemented, partly because they fell victim to a lack of co-operation between the banking and securities arms of Barings.
Mr Leeson worked for Barings Futures, a specialised financial division within Barings Securities, the equity trading operation.
The head of Barings Securities is Peter Norris.Reuse content