Saturday 20 January 2018

'The stress of being in debt is ravaging, it is the new cancer'

Rogue trader Nick Leeson brought down Barings Bank, and now he's taking the banks on again, but this time on behalf of struggling borrowers, writes Sarah McCabe

Nick Leeson. Photo: Andrew Downes
Nick Leeson. Photo: Andrew Downes
Nick Leeson.
Sarah McCabe

Sarah McCabe

WOULD you take financial advice from the man who single-handedly brought down the world's oldest bank? A man who is responsible for 1,200 people losing their jobs? A man who accrued $1.3bn worth of liabilities? A man who ran from it all, leaving only a scribbled note reading "I'm sorry" for his colleagues to find?

Well, that's what Nick Leeson is offering.

Two decades after he bankrupted Barings Bank, the world's most infamous rogue trader is living between Galway and Dublin and channelling his energy into a debt mediation business, negotiating insolvency deals for business people around the country.

It makes sense, when you think about it.

The same aggressive, take-no-prisoners attitude that saw Leeson reach such lofty heights and crushing lows on the Barings trading floor in Singapore probably comes in handy when dealing with Irish banks. Tall, robust and straight-talking, with a heavy London accent, it's easy to picture Leeson hammering out a good deal.

"Our success rate is very high. We're getting substantial write-downs. Any bank that says it doesn't do write-downs is lying, plain and simple," he says bluntly, tired after three days of travelling to and from his lucrative second job, after-dinner speaking gigs.

He clearly harbours a level of distaste towards banks – understandably, for an industry that has shaped his whole life. His transgressions at Barings lost him everything, landing him in a Singapore jail where he was diagnosed with colon cancer. Twenty years later, that same industry is now ruining his clients and friends.

"Banks are winning the war right now, 100 or 1,000 nil, for sure. They're certainly under more scrutiny than ever before, and that's great – but it's not enough. We need to be at the point where nobody will ever, ever sign a bank document without understanding it."

Nobody at the debt mediation business where he works – the Dublin practice of Northern Irish business GDP Partnership – is a certified Personal Insolvency Practitioners, the qualification rolled out with much fanfare by the Government alongside long awaited reforms to Ireland's insolvency laws. Leeson completely dismisses that system.

"It just doesn't work. Its intention is still to punish – people are penalised for three to five years. That's been reflected in the take-up in the service, which has been awful. No one's interested," he says.

His clients are mainly business people, with business debts or loans on multiple properties. He finds Ulster Bank easiest to do deals with and Bank of Ireland the most difficult, because it's slow to act.

"Ulster Bank has always been easiest, probably because they have the backing and leadership of a huge UK parent. They specifically told us recently that they would be taking a much more aggressive stance towards the whole debt negotiation process – they want to speed up the process.

"Bank of Ireland is the slowest, though in fairness they are doing deals now. All of the Irish lenders have become more willing to play ball in the past few months."

Still, he's critical of most of the deals being tabled by banks.

"We're seeing offers of lots of little derivations on split mortgages, which just extend rather than address the debt, that kind of thing. I've had clients asked to take out 10-year zero coupon bonds to pay off their mortgages, just postponing the inevitable. Our policy is – deal with it today."

Leeson was born in Watford, a suburb of London that's famous for its football club and little else. He never went to university. After finishing school in the mid-Eighties, he joined private bank Coutts as a clerk, worked his way through a string of banks and joined Barings in 1989.

A short history of what happened next: After making a name for himself at Barings in London, Leeson was appointed to a senior position in a futures trading operation at the Singapore International Monetary Exchange in 1992.

Once safely ensconced in Singapore, he began making unauthorised speculative trades that at first made large profits for Barings. But his luck soon turned sour and the losses mounted. He used one of Barings' error accounts (accounts used to correct mistakes made in trading) to hide his losses, which the management structure at Barings made easy to do.

By the end of 1994, the error account's losses had ballooned to about $300m. In early 1995 Leeson placed a massive bet on the Singapore and Tokyo stock exchanges in an effort to recoup some of this money – but it went spectacularly wrong when the Kobe earthquake hit on January 17 sending Asian markets into a tailspin.

Leeson fled Singapore leaving losses totalling $1.3bn, twice Barings' available trading capital. After a failed bailout attempt, Barings was declared insolvent. He was eventually picked up in Germany, and sentenced to six years in a Singapore jail. While in prison he was diagnosed with cancer and also divorced by his first wife.

But all was not lost. Finding a solution amid chaos, emerging triumphant from the ashes, is a theme that's dominated his life. Though he left prison with no plan, blinking in the sunlight with his reputation in tatters, Leeson quickly found himself in demand. People around the world just couldn't wait to hear what it feels like to trip up quite so spectacularly.

"It's a period I'll always be remembered for, the most embarrassing time of my life," he says. "But my infamy and notoriety have given me chances, too. I didn't leave prison with a game plan but opportunities quickly presented themselves."

Despite the fact that his work as an after-dinner speaker now earns him a comfortable living, he says he doesn't believe in motivational speaking ("You have to motivate yourself."). He's met some of the world's most in-demand speakers – Mikhail Gorbachev, David Frost, Stephen Fry – but the only one he was affected by was Aaron Ralston, the American who cut off hit own right arm after becoming trapped by a rock in the Arizona desert, inspiring the film 127 Hours. "I didn't know who he was when I met him," says Leeson sheepishly. "I tried to shake his hand ... "

After travelling the world telling his story, he fell in love with a girl from Kells. Sick of commuting between Ireland and the UK, they moved to Galway in 2003 and he later became heavily involved with Galway FC, building on his life-long love of football.

He loves Ireland, he says, and adores Irish people, though the average Paddy borrower still gets a telling off.

"Irish people definitely have a different attitude to debt compared to the UK population," he says. "In the UK, people understand they will lose their house if they don't pay their debts. Here, we see people who haven't paid a penny towards their mortgage in four years and are still surprised to get letters from their banks. It's mostly because there's no history of repossession here."

Another theme that has dominated his life, alongside the ability to bounce back, is stress. Stress nearly ate Leeson alive at Barings, and just about finished him off when he was diagnosed with colon cancer in prison. He's since written a book about how to manage it.

"Stress is just toxic. It changes the way you live your life, everything – what you eat, how long you sleep, how much you exercise."

He was verged on alcoholism by the time he went to jail, he says, using alcohol to relieve work tensions. Now he doesn't drink. "My behaviour just got worse and worse in the three years leading to the collapse of Barings. I went from having a couple of drinks once a week to three or four big nights out, up until the early hours. I'd sleep it off on the trading floor the next day."

Today's young traders, he says, are still following that same work-hard, play-hard lifestyle. Despite Barings, despite the global financial crash, despite the fact that a big chunk of society now believes investment bankers deserve a special place in hell, he believes the industry hasn't changed.

"That mentality is still there. There's still hundreds of graduates joining investment banks and turning into psychopaths within the year. If you're a successful trader, you are idolised. It's like a modern-day amphitheatre, where the victor is worshipped."

Rich young traders, he says, are not unlike rich young footballers – "they both get too much money, too soon, in a fairly small community, and inevitably get into trouble. It's always going to be that way, I haven't seen any change."

But the stress of being in debt is perhaps the most corrosive of all, more so than anything a workplace can throw at you. "It's just ravaging. What's particularly corrosive is that people don't talk about it. Most people just stick their heads in the sand. We describe it as the new cancer."

Having experienced both cancer and debt in their most extreme forms, he says there are clear parallels between the two. "Medicine and finance are two of those areas that the average Joe just doesn't know that much about. You're hugely reliant on your doctor or your financial adviser. I'm not trying to discredit doctors here – they only make mistakes very occasionally. But in the case of financial advice, mistakes are rife."

The shame attached to being in debt is just as toxic as the debt itself, he says. "Lots of big Irish companies have had their debts restructured over the years. Why should individuals be shamed for the same thing?"

Might this man be the best son-in-law in the world?

If I didn't live in Galway, the place I would live in is. . .

Somewhere warm!

The last meal I really enjoyed was. . .

Dinner at Cleaver East, Dublin, two weeks ago. They do a kind of fusion tapas, strange but gorgeous.

My greatest indulgence is. . .

I'm not sure. . . I don't really have one. I rarely drink, I don't enjoy it.

My favourite websites are. . .

Google News! I'm not loyal to any one media source. I've been coloured by experience. Lots of incorrect things have been written about me.

The best gift I've given was. . .

I gave Garth Brooks tickets to my mother-in-law.

My favourite piece of clothing is. . .

Anything casual.

An unforgettable place I've travelled to in the last year is

I went to Stellenbosch in South Africa with my wife and family in November, it was spectacular.

The last music I downloaded was. . .

I'm not a big music fan and I've never downloaded a song in my life! I listen to i102 - 104 at home.

The books on my bedside table are. . .

There aren't any – I only read when I'm travelling. At the moment I'm reading 'The Hour Between Dog and Wolf' – a book by John Coates about the neurology of trading.

What I like to do when I'm not working. . .

I'm a massive sports fan, particularly football, though I've ended my association with Galway FC [Leeson was chief executive there for a time]. Football is a tough sport in this country. I used to box when I was younger and I follow a bit of GAA now – my youngest son is an avid hurler.

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