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Barings was always willing to take the big risk abroad

THE BALTIMORE SUN

The crisis at Barings is in keeping with its history. More than most firms, it has shown a willingness to invest abroad, often in markets that its competitors had deemed far too risky.

It was Barings that arranged the financing for the United States' purchase of the Louisiana Territory from France in 1803. It was a transaction that seemed far too dangerous to some.

"We all tremble about the magnitude" of the loan, a Barings executive wrote that year.

In recent years, Barings has staked out a position as a leader in research and trading in emerging markets, providing comprehensive evaluations of Latin American and Asian markets as those markets have zoomed and crashed. And it was a trader in Singapore who was reported to have made the big bet -- on Japan -- that brought on the present crisis.

As recently as two weeks ago, the firm was hiring investment bankers for its emerging-markets group. It planned to open offices this year in Russia and Turkey but was pulling back in Britain, where it announced plans to withdraw as a primary dealer in British government bonds.

Founded in 1762 by Francis Baring, the great-great-great grandfather of Peter Baring, the firm's current chairman, Barings has remained under family management for virtually its entire history. It is a history that has been close to the British establishment, of which it was for centuries an important part.

It was an big financier of Britain's war against France in the Napoleonic age, and it remains a manager of part of Queen Elizabeth's fortune.

But that history has been shaky at various times, most notably just more than a century ago.

In 1890, Barings went broke largely as a result of bad loans to Argentina, a country it expected would grow prosperous. The firm was reorganized only with the support of the Bank of England, which had to keep loans outstanding to the firm until 1895, when they finally were repaid.

That collapse cost the leading members of the family dearly. Edward Charles Baring, the first Lord Revelstoke, was running the firm at the time and plunged heavily into Argentina, despite voices of caution from competitors.

Most of his assets, including a big art collection, were liquidated to pay debts.

"Lord Revelstoke will not be able to ride the high horse as much as he used to," Randolph Churchill, the father of the future prime minister, wrote in 1890.

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