The main reason why Jester remembers this incident so clearly is that this sudden incident triggered the collapse of a bank.

This bank is a 100-year-old bank.

Bank of Bahrain.

You know, the Bank of Bahrain is not an ordinary bank like a cat and a dog, this is a real old aristocratic bank with a deep historical background, the richest woman in the world, Her Majesty Queen Elizabeth II also trusts this bank very much, and often hands over their financial business to this bank to take care of, it can be said that in the entire financial world, although the Bank of Bahrain is not as rich as the four major investment banks in the United States, but its influence is not weak at all.

In 1763, Francis. Sir Bahrain founded the Bank of Bahrain in London, the world's first "commercial bank", which provides funding and advice to its clients, as well as its own trading.

Of course, it had to take the same risks as any other businessman to buy and sell stocks, land or coffee, and thanks to its flexibility and innovation, Barings Bank quickly became a huge success in the international financial sector. It also has a wide range of activities, whether it is refining copper ore in the Congo, selling wool from Australia, or digging the Panama Canal, the Bank of Bahrain can provide loans for it. However, unlike ordinary commercial banks, the Bank of Bahrain does not develop the deposit business of ordinary customers, so its source of funds is relatively limited, and it can only rely on its own strength to survive and develop.

In 1803, when the fledgling United States bought the southern state of Louisiana from France, all the money came from the Bank of Baring. Although the Bank of Bahrain had a strong competitor at the time, a Jewish-run Rothschelt Bank, the Bank of Bahrain was the bank of choice for governments, corporations and many customers.

In 1886, when the Bank of Bahrain issued "Guinness" securities, buyers poured into the bank with application forms in hand, and then had to use police force to maintain them, many of whom waited in line for hours to buy a small number of shares. Then wait for the opportunity to throw. By the time it was sold the next day, the stock price had doubled.

At the beginning of the 20th century, the Bank of Bahrain was honored to acquire a special client: the British royal family. As a result of the outstanding contribution of the Bank of Bahrain, the Bahraini family has received 5 hereditary titles. This is a world record that laid the foundation for the Bank of Bahrain's prominence.

Jester remembers that when the news of the bankruptcy and collapse of the Bank of Bahrain broke, it immediately caused a series of strong fluctuations in the financial community in Asia, Europe and the Americas. The pound fell to its lowest point against the mark in the Tokyo stock market, and the London stock market also plummeted. The Jones index fell by 29 percentage points. Just from this point, we can see what kind of influence this bank has in the world's financial circles.

There are many ways to analyze the reasons for the collapse of the Bank of Bahrain.

Some analyses, if not the vast majority, will blame Nick Leessen for the collapse of the Bank of Baring, but Jester personally feels that such an attribution is not justified, at least, not in this matter. The most important reason for the occupation is not so much this, but rather the lack of supervision of the Bank of Bahrain itself.

Nick Leeson is no ordinary person, he is a "genius trader" in the international financial world. He used to be the general manager and chief trader of Bahrain Futures Company of Bank of Bahrain in Singapore. Known for its steadiness and boldness. In the futures market, he was hailed as the "invincible Leessen", that is, the authority given to him by Bahrain was considerable. Because his abilities are really high, and he is indeed able to earn a lot of money for his employer.

So how exactly did the whole Bahrain Bank happen?

It's actually quite simple, because of the Plaza Agreement. At the turn of the 90s and 80s, Japan went through the craziest short-term era when money was like dung, and taxis were starting at 1 million yen, and soon the competition began to decline, but in the 94s, Japan's economy actually showed signs of recovery, which is also the consensus of many people in the financial circles.

And Nick Leeson has caused a lot of deficit to the company because of some of his own internal operations, amounting to 50 million pounds, and he must do everything possible to make up for this shortfall.

So, there is this Bahrain incident.

No matter what you do, mistakes are inevitable, but it's all about how you deal with them.

This is especially true in futures trading, for example, someone will mistake the "buy" gesture for a "sell" gesture, someone will buy a contract at the wrong price, someone may not be cautious, someone may buy June futures instead of March futures, and so on. If the mistake is irreversible, the only feasible way is to transfer the error to an account called the "wrong account" on the computer and report it to the bank's headquarters.

When Lee Sen was working as a futures trader in Singapore in 1992, the Bank of Bahrain originally had an "error account" with the account number "99905" to deal with errors caused by negligence in the course of trading. This was a normal wrong account in the course of the functioning of the financial system. In the summer of 1992, the London headquarters took full charge of the liquidation of Gordon. Bausse made a phone call to Lisson and asked Leeson to set up a separate "error account" to record minor mistakes and deal with them himself in Singapore so as not to trouble the work in London.

So, Li Sen immediately found Liesel, who was in charge of the liquidation of the office, and asked her if she could set up another file. Soon, Lissell was typing some commands into his computer and asking him what account he needed. In Chinese culture, "8" is a very auspicious number, therefore, Li Sen used it as his auspicious number, because the account number must be five digits, so that the "wrong account" with the account number "88888" was born.

A few weeks later, there was another phone call from the London headquarters, which had set up new computers and asked the Singapore branch to follow the old rules, and that all errors still be reported directly to London from the "99905" account.

The "88888" error account was set up and put on hold, but it became a real "error account" stored in the computer. Moreover, the headquarters had noticed many mistakes in the Singapore branch at this time, but Li Sen skillfully prevaricated. The neglected account of "88888" provided an opportunity for Leesen to create false accounts in the future, and if the account had been cancelled at that time, Bahrain's history could have been rewritten.

17 July 1992. One of the traders under Li Sen, who has been in Bahrain for only one week, is Kim. Wang made a mistake: when Fuji Bank asked to buy 20 Nikkei futures contracts, the trader mistakenly sold 20 shares, a mistake that was discovered during the liquidation work that night.

To correct this error, 40 contracts must be bought back, representing a loss of £20,000 at the closing price of the day, which should be reported to the head office in London.

However, under various considerations, Li Sen decided to use the wrong account "88888" to take 40 short contracts of Nikkei futures to cover up this mistake. However. In this way, the transaction carried out by Leessen became an "owner's transaction", exposing the Bank of Bahrain to a risky position under this account. A few days later, with the Nikkei rising by 200 points, the loss of the short position increased from £20,000 to £60,000, bearing in mind that Leessen was paid less than £50,000 a year at the time.

At this time, Lisson did not dare to report this mistake to the top.

With more and more similar internal operations, Nick Leeson has saved more and more losses in this 88888 account. At most, it reached 50 million pounds, which also attracted the attention of the headquarters of the Bank of Baring, who investigated Nick Leessen several times, but he dealt with it with very clever means.

For example. Nick Leeson knew that Bahrain Bank rarely checked the accounts of really big customers, such as Citibank, so. He made a fake account of 50 million pounds of deposits in Citibank to deal with the investigation of him by the headquarters, and successfully covered up the huge loss of 50 million pounds in his 88888 account.

Still, he also knows. He couldn't cover it up forever, he had to do everything he could to make up for the £50 million deficit.

With his £50,000-a-year salary plus a £100,000 bonus, he couldn't have done that.

So, he had to put his hand into the company's account.

Nick Leeson also saw the Japanese market at this time, and he keenly felt that now that the Japanese economy has begun to come out of recession, the stock market will have a sharp upward trend. So I bought a lot of Nikkei 225 futures contracts and call options. On January 16, 1995, the Great Hanshin Earthquake in Kansai, Japan, caused the stock market to plummet, and Li Sen's long position was hit hard, with a loss of up to 210 million pounds.

210 million pounds is an astronomical figure for ordinary people, but for an old investment bank like the Bank of Bahrain, although this number is huge, it is still within the scope of his bearing, and it will not shake the position of the Bank of Bahrain in the financial world, but such a huge loss, although it cannot shake the loss of the Bank of Bahrain, is enough to shake the position of Nick Leessen, a promising trader, in the Bank of Bahrain, and even in the entire financial world.

Just imagine, if this matter is settled, he admits the loss of more than 200 million pounds, plus the fake accounts in the fake account of 88888 he did before will be exposed, then the prestige and honor he accumulated before will disappear in one day, not only will the Bank of Bahrain no longer give him the kind of transcendent status he had before, but he will even directly let him roll up and get out, and even go directly to prison, facing an unknown number of years in prison, and the consequence of this is that he will be in the entire financial circle in the future. It will be notorious in the circles of the entire trader.

Losing the chance to survive.

When he gets out of prison, no one will even hire him.

Who would dare to hire a trader who gave himself a patron and caused 200 million pounds at once because of private transactions?

Think you're too rich?

Therefore, Nick Leeson made a big bet, this time he made a big bet behind his back to the Bank of Baring, he relied on his genius mind, keenly judged that the Nikkei index will definitely rebound, so in order to turn defeat into victory, he once again made a large number of Nikkei 225 futures contracts and interest rate futures contracts, and the total position has reached more than 100,000 lots.

You must know that this is a futures contract that is amplified by dozens of times with a "leverage effect". When the Nikkei 225 index fell below 18,500 points, Mr. Leessen's position lost more than $2 million for every point of decline.

"Things tend to go in the worst direction", is a summary of the strong theory.

On February 24, after the Nikkei index accelerated its plunge again, the position of Bahrain Futures, where Mr. Leesen worked, lost nearly as much as its entire Bahrain banking group's capital and reserves. There was no way to raise funds, the losses were irretrievable, and Li Sen absconded in fear of crime.

The Bank of Bahrain was in the brink of collapse, and the chairman of the bank had to turn to the Bank of England in the hope of saving the day. However, the losses have already amounted to $1.4 billion by this time, and will further expand as the Nikkei 225 index continues to fall. As a result, no one from the financial institutions dared to reach out to Bahrain, the former dignitary, and the Bank of Bahrain collapsed.

Of course, Nick Leessen did bear a lot of responsibility in this matter, but it was definitely not the real cause of the collapse of the Bank of Baring.

The real reason is one - if it were not for the tsunami collapse of the Nikkei caused by the Great Hanshin earthquake, then the Bank of Bahrain would not have collapsed, and Nick Leeson could have successfully filled the deficit of 88888, and even made a lot of money.

After all, bullishness on Nikkei at that time was a trend in the world financial community.

And Nikkei did make a big difference at that time.

Without the sudden event of the Great Hanshin Earthquake, I dare not say how much Nikkei would have been able to rise, but it would certainly have risen.

Although Jester thought of the Great Hanshin Earthquake, there was also a problem here, it was force majeure, it was an emergency, and it was impossible for him to use his previous foresight to convince Sandy. Will came to participate in this gamble, after all, what he had in the eyes of others was only foresight, but it was definitely not a predictor of the future.

When everyone is optimistic that the Nikkei will improve, he is bearish alone, and most importantly, now that Japan has not exposed too serious problems, and he is not the king of shorting, Soros will definitely be ridiculed.

The most important thing is that ridicule is not the most critical thing, the most critical thing is because if it weren't for the Great Hanshin Earthquake, this incident would not have happened.

However, if you do it yourself, it is indeed a profitable opportunity.

At least billions of dollars in earnings are in front of their eyes.

That's pretty much all of his current possessions.

Greed began to spread in Jester's heart, to do it or not to do it? (To be continued......)