Dutch bank could buy Barings for £1

Hopes of a rescue deal for Barings rose last night with administrators close to selling the collapsed City bank as a going concern to the Netherlands' third largest bank for just £1.

The sum involved is nominal but it would enable the bank's depositors, which include the Queen, and creditors to emerge from the dbcle virtually unscathed.

Internationale Nederlanden Group (ING) was yesterday given exclusive rights by the administrators to look at the books and come up with a bid.

Since time is short, because of the threat of client and staff defections, an announcement could be made today.

One rival banker involved in negotiations to buy Barings this week said: "If ING bid a pound they will get it". Another put the chances of the Dutch bank buying Barings at "very high".

News of the deal came as the Bank of England intensified efforts to discover who among senior executives at Barings knew what and when about Leeson's ruinous trades in high-risk derivatives.

Peter Baring, the chairman, has claimed the bank was the victim of a criminal fraud and that it knew nothing of the problems until last Friday. However, as the Independent reported earlier this week, the bank's London treasury department was authorising the transfer of huge sums to fund margin calls on Mr Leeson's positions for at least a month prior to the collapse.

Colleagues who were contacted after Mr Leeson's disappearance from Singapore said he told them that he was acting on the instructions of superiors and planned to "name names going right to the top".

A number of senior London executives are understood to have consulted independent lawyers.

ING, which has a market value of £8.5bn, has stolen a march on its Dutch rivals ABN Amro, Britain's NatWest and Wall Street's Merrill Lynch because it is the only bank willing to buy the whole of Barings. Others have wanted to "cherry pick" the fund-management side which manages £30bn of assets, and the corporate advisory arm. Buying the whole group would involve shouldering massive and still unquantified liabilities.

Such a deal would be by far the best outcome for the administrators, the Bank of England and the employees of Barings, according to City opinion. Breaking up the group would produce immense legal problems over the £633m of cash invested in the fund-management side but held on deposit by the separate banking operation.