The infamous ex-trader on learning from his mistakes – and healing the banking industry
Nick Leeson entered business folklore in 1995, when – as head trader at the Singapore operations of Barings Bank – he was sentenced to six years in jail for hiding losses of £862 million in a secret account, actions which sank the bank and inspired a hit film starring Ewan McGregor. People Management asked him what he’s learned in the years since.
You’ve seen the worst of banking. Do you believe the industry can change for the better?
Barings was always described as a wake-up a call that we would never forget. Now it’s just another one of those things in history that we’ve failed to learn from and managed to repeat on a number of occasions since. The good thing is that banking is getting far more media than it ever did in the past – people are challenging it far more than they’ve ever done.
We get this kneejerk reaction all the time where people want to separate the retail side of the bank from the investment side but banks are continually getting the legislation watered down. It’s an indication of how powerful they are.
Do you have to bend the truth to succeed in an environment like that?
We shouldn’t tar everybody with the same brush. I’m sure there are beacons of credibility out there, but there’s no business quite as competitive as finance. There’s competition between individuals and between different trading desks. It’s very visual – everyone knows who’s making the most money. There’s a huge fear of failure and you tend not to be very well-supported in terms of HR and the way you develop as a person and a manager.
I thought I was ready for that environment. In hindsight, I was totally ill-suited for it. One of my faults was that I didn’t manage people particularly well. There was no differentiation between me and them. In particular, the people I was working with were the people I was socialising with and that led to fairly unhealthy business relationships.
You took a degree in psychology. What did that teach you about your actions?
Prison was more of a learning curve than the degree. I had an awful lot of time to look at how I reacted to certain situations, and I developed a template of how I would have preferred to react. I was very compulsive, very stubborn... there was a process I had to go through where I realised I didn’t particularly like those mannerisms. It was backstreet psychology in a 6x9 cell where you’ve got a lot of time to churn over the past.
I had a very exalted opinion of what success meant. For me, it was being at the top of the organisation and making key decisions. You come to understand that people can garner just as much success from putting enough food on the table for their children. Today, I veer more towards that lower end of the scale because the upper end was something that affected me very badly.
Being compulsive and stubborn are traits that help you succeed in finance, though…
They are, but like any behaviour there’s a healthy side and an unhealthy one. I experienced far too much of the unhealthy one. It’s ok being stubborn and understanding risk, but just being stubborn for stubborn’s sake will get you into a lot of trouble. A lot of the process for me was accepting that I was a particular way, becoming accountable for it. It’s like a drink problem, a drug problem or anything else – if you don’t accept it, you can’t move forward.
You have to reconcile yourself with the past. I went through a process of wishful thinking when I was in prison, constantly beating myself up about decisions I made. But you can’t go back and change those situations. If you continue going down that spiral, it becomes very depressing and ultimately you become manic. You see it in prison – some people look for the sharpest part of the wall and start banging their head against it. You have to look for the positives.
Nick Leeson speaks at conferences on finance, risk, fraud, compliance and corporate responsibility, as well as on the after-dinner speaking circuit. He is represented by NMP Live, one of the UK’s leading speaker bureaux. For more information, visit nmplive.co.uk or call 01372 361004. Nick Leeson can be followed on Twitter @TheNickLeeson