FALLOUT FROM BARINGS FIASCO SPECTACULAR FAILURE LEAVES OTHER BANKS WITH PR DILEMMAS

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The rogue trader who lost close to $1 billion and triggered the collapse of the U.K.'s prestigious investment bank Barings PLC has been nabbed, but the ethical questions raised are likely to haunt banks and financial institutions for months to come.

Crisis experts urged top executives in the investment world to redouble their efforts at internal control and to allay fears by conveying a message of trust to consumers and institutional investors alike.

"The issue that it puts in the spotlight once again is how well do financial institutions manage risks and how strong are their internal controls?" said Michael Claes, a Burson-Marsteller exec VP who handled crisis management for Salomon Bros. during the bond trading scandal in the early 1990s.

"Every time we experience something like this-whether it is Barings or the Orange County collapse, the question rises to the surface: What do they have in place that protects me?" Mr. Claes said.

Such pointed questions might have helped brake futures trader Nick Leeson, whose failed deals have now forced Barings into receivership.

"I think the impact will be global," said Robert Dilenschneider, CEO of the Dilenschneider Group, a New York-based public relations agency. "Most consumers won't know the difference between a merchant bank like Barings and a commercial bank like Citicorp. It is going to cause a lot of financial institutions to rethink their control levels."

Some U.S.-based companies with direct ties to Barings have more pressing problems.

Executives at Boston-based Baring America Asset Management, a wholly owned subsidiary of Barings PLC, declined comment.

Early last week, New York-based investment banker Dillon Read, which has been 40% owned by Barings since 1991, released a statement through high-power PR agency Howard J. Rubenstein Associates, stating that the insolvency of the British company had no impact on its operations.

Barings paid a reported $78 million for Dillon Read four years ago. Dillon Read executives said they hoped to buy back the stock owned by Barings.

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