How Nick Leeson's trading losses on account 88888 ran into telephone numbers. The Bank that liked to say nothing

set up to investigate the affair, puts almost all the onus on Barings

and on former derivatives trader Nick Leeson.

One unresolved question is why Mr Leeson did what he did as, according

to Bank of England Governor Eddie George, there is no evidence that he

benefited personally from the increasingly complex levels of dealing in

Singapore.

There are now calls for the Bank's regulatory role to be handed over

to another body with the possibility of a future Labour government

introducing a banking commission.

That does appear to be an attractive concept at first sight with

memories still rankling among depositors over the collapse of the Bank

of Credit and Commerce International.

However, Mr George argued vehemently against it last night.

While banking supervision is done differently elsewhere, a change in

Britain could only mean changing the brass plate on perhaps a different

building with, in all probability, the same people. And could one get

better people to act as regulators and supervisors?

There is also the cost question and the Head of Supervision, Brian

Quinn, argued that the Bank of England has proved more efficient in

preventing failures and at lower cost than has been the case in both

North America and Europe.

However, there was an almost tangible air of complacency from Mr

George when perhaps a little humility would have been in order. Only one

person has resigned, Mr Christopher Thompson, because he has, according

to Mr George, found his position untenable and felt that he had lost the

confidence of people around him. But who supervised Mr Thompson?

Mr George was quick to deny that there was an old boy atmosphere as

regards certain banks, although the board report does point to the Bank

regarding controls at Barings as ''informal but effective''.

Whether that would also apply to a second tier bank is debatable.

It is quite strange, looking at the report, to see how little direct

interest the Barings' board appeared to take in the running of the

Singapore operations apart from the levels of profitability. These were

at time so substantial that suspicions should have surely been aroused

and much closer independent supervision imposed.

Even as late as January, when something could have been done, managers

in London had become aware of market rumours and concerns about the

level of trading in Singapore and that there was a possibility that a

client could not meet a margin call. It even received on January 27, a

month before nemesis, a call from the Bank of International Settlements,

the body that supervises central banks such as the Bank of England, that

it had heard rumours about Barings.

These concerned the problems with the Nikkei contracts and that it

could not meet its margin calls. However, this apparently caused little

concern and nothing of substance was done.

The report said that Leeson, by the end of December last year, had run

up losses on account 88888 of some #208m.

''Throughout he represented that he was in fact making profits,'' it

added.

''Indeed, he was perceived within Barings to be a star performer.''

But by the end of February the accumulated losses on that account had

risen to #830m.

Leeson's unauthorised trading was concealed by a number of devices,

including the suppression of account 88888 from Barings in London,

submission of falsified reports to London, and the misrepresentation of

profitability as well as a number of false trading transactions and

accounting entries.

Barings collapsed the next month after losses totalling #827m were run

up by Mr Leeson. Barings was later taken over for the nominal sum of #1

by the Dutch financial services group ING.

However, given that the banking system is international and ever

seeking new avenues for profit, there will be episodes such as Barings.

Regulation and supervision should nip in the bud any potential

failures, but perhaps one should be realistic and accept that from time

to time a collapse will happen. So perhaps it will be necessary to

ensure that there is adequate compensation -- and retribution -- where

necessary.