The Dutch bank ING has told officials investigating the collapse of Barings that it would welcome a cleansing among the merchant bank's senior executives. The new owner of the failed merchant bank expressed concern over apparent management incompetence during its two-day look at Barings' books prior to making its offer, sources said yesterday.
There are four teams of specialised investigators combing through Barings documents and questioning senior staff, urgently trying to clarify the events leading up the bank's collapse. Officials close to the investigations said Peter Baring, the chairman, Andrew Tuckey, chief executive, Peter Norris, the head of Barings Securities, and Ronald Baker, the head of Barings' financial products group, are expected to leave the bank. Mr Baring, Mr Tuckey and Mr Norris are no longer believed to be actively involved in the businesses, but engaged in helping the hand-over to the new directors, who are from ING. The investigations are not expected to be completed for a few months.
Barings finally reopened for business under new ownership yesterday, after ING had gone back to the judge overseeing the administration, to strengthen its protection against unforeseen claims arising from the merchant bank's collapse under losses of £860m.
The short examination of Barings' books had produced concerns at ING that poor management may have left other horrors still be discovered. After agreeing last Sunday in principle to buy Barings, ING's lawyers subsequently introduced a number of modifications to close out the risks of new claims suddenly arising. This explained the lengthy delay in finalising the purchase, as ING had to resubmit its new document to the judge during a three-and-a-half-hour session on Wednesday.
ING has in effect purchased the Barings name, and nearly all of the active businesses, leaving the administrators, Ernst and Young, with the empty shells of Barings plc, the holding company, Baring Brothers and Co Ltd and Barings Securities, along with any future claims against them.
All the Barings businesses reopened yesterday apart from Barings Futures Singapore, where Nick Leeson conducted his disastrous derivatives speculation, and Barings Securities Japan. ING has an option to buy both these businesses pending the outcome of judicial investigations.
The four investigations at Barings are being conducted by the Bank of England, the Serious Fraud Office, a "forensic" team from ING and specialised fraud accountants from Ernst and Young. Apart from the alleged fraud by Mr Leeson in Singapore, the inquiries are focusing on two areas.
The first area is the procedures for authorising transfers of more than £500m to fund margin payments in Singapore, and on what basis of knowledge this was done.
The second is to find out who knew of control problems in the Singapore office, and why warnings were not acted on.
ING announced yesterday that it will pay 7.5 per cent to holders of £100m subordinated bonds in Barings plc. Bondholders had tried to block the purchase by ING, saying they were the main losers.