History repeats for bank

PUBLISHED : Monday, 27 February, 1995, 12:00am
UPDATED : Monday, 27 February, 1995, 12:00am

THE Singapore scandal is not the first time that Barings has found itself having to be rescued by the Bank of England.

The City of London still remembers the Baring crisis of 1890 when the bank found itself holding huge amounts of Argentinian bonds which had become practically worthless.

It was - relatively - even more serious than today's problems, for the amount outstanding was more than twice the total reserves of the Bank of England at that time.

So serious was the matter that Bank of England officials were to be seen in the City on a Saturday.

It was decided that Barings could be saved, but it would require GBP9 million (about HK$108.54 million) cash up front, an enormous amount in those days, and too much for the Bank of England to commit by itself.

The government stepped in with guarantees, and, to back these, the bank's governor went around the City collecting cash.

Within a day he had his money, and Barings lived to trade again - but for how much longer now remains to be seen.

Should it have to lose its independence, a 230-year history will come to a sad end.

The bank was set up by John and Francis Baring, sons of a textile merchant, who had emigrated from Bremen to England in 1717.

By the middle of the 19th century, Barings was so powerful that it was regarded as one of the big powers in Europe.