All About Barings

Who founded the firm?

In 1762, three brothers John, Francis and Charles Baring established the London merchant house of John & Francis Baring & Co, later known as Baring Brothers. Francis Baring took the lead in managing the business.

What did Barings originally do?

As a merchant house Francis Baring and his brothers bought and sold goods in Britain and from other countries. They would often work together with other merchants on joint account and built up a network of contacts.

How did their business grow?

Francis Baring began to act on behalf of other merchants. If merchants were based overseas and couldn’t be in London to deal with people face to face he would arrange shipping and insurance, and make and collect payments for them.

How did this become a bank?

As Francis Baring made more and more arrangements for merchants the business grew. He eventually began to lend money to these merchants and arrange payments for them. This was known as a merchant banking. The bank was run by a group of partners who invested their money in the firm. Partners were often members of the Baring family and but other people were also welcomed into the firm.

What else did Barings do?

Once they had entered the world of finance Barings began to arrange lots of different types of deals for governments and businesses. For example Barings helped the British Government raise finance to meet the cost of its war effort in North America. A little later they helped the United States raise funds to purchase the Louisiana Territory from the French. After the Napoleonic Wars ended Barings provided loans to the French Government so that they could make reparation payments to the victorious powers. This led the Duc de Richelieu to make the famous statement that "There are six great powers in Europe, England, France, Prussia, Austria, Russia and Baring Brothers". Barings went on to become the London agents of the governments of Argentina, the United States, Canada and Russia. They also financed projects such as the Canadian Pacific Railway.

Did they always make money?

Mostly the bank did make money however sometimes things did not work out as expected. In 1890 the bank ran out of reserves of cash and had to be rescued by a consortium organised by the Bank of England. The partners lost their personal fortunes. The bank was re-established by John Baring as a limited company.

How did things change for Barings in the 20th century?

In the late nineteenth and early twentieth centuries Barings did more work for British companies. They raised finance for companies such as Guinness, Whitbread, the Manchester Ship Canal Co Ltd, Vickers and the London Omnibus Co Ltd. From the 1920s they also began to do general corporate finance work advising companies on reorganisations, acquisitions and takeovers. After 1945 corporate finance work for British businesses, fund management for pension funds, institutions and individuals, and banking formed the firm’s three principal divisions.

What happened to Barings?

From the late-1970s Barings began to do more international business once again and had many offices overseas. It was unauthorised trading by Nick Leeson, an employee in Barings Singapore office, that led the company to run out of capital so that they could no longer trade. The company was declared insolvent in February 1995 and the business was acquired by ING of the Netherlands. Some of Barings’ activities were integrated in ING’s business units, while other parts were closed down or sold - the asset management arm of the business, Baring Asset Management, was bought by MassMutual Financial Group in 2004.

What happened to Barings archives?

ING still owns the archives of Barings Bank going right back to its foundation. The archive has been loaned to The Baring Archive Limited, a charitable company established by ING to manage the collections and develop their use as an educational resource.