the Barings Bank crisis that paved the way for written assurances from London that more than $40 million placed by a Bermuda company with Barings fund managers was safe.

And president of Kast Investment Management Ltd., Mrs. Anne Kast, conceded that the crisis caused her to accelerate a plan to further diversify her firm's $70 million of assets under administration. Even today, she is stepping up her relationship with mutual fund companies like Fidelity.

Mrs. Kast was reflecting on the banking bombshell that exploded earlier this year, with fall-out reaching around the world, including her business in Bermuda.

Barings Bank collapsed in late February after Asian futures and options moves by trader Mr. Nick Leeson resulted in losses around $1.4 billion sending the bank into the hands of court appointed administrators who sold it for a pound to Internationale Nederlanden Groep NV (ING).

But she was placing calls to London, seeking cast iron assurances that local clients' assets were protected.

She recalled, "I was contacted by (BMA general manager) Malcolm Williams and I told him that the assets appeared to be safe, it was just the cash that might be a problem. He asked if I had that in writing from Barings. I did not.

"He said I couldn't tell people that the assets were safe, unless I had it from Barings in writing. When I called my Barings contacts back, they said the whole group of administrators who had moved in would not give permission for a written confirmation.

"Mr. Williams told me to call Barings yet again and tell them that if they can't give it to me in writing, he was going to call the Bank of England, and the Bank of England would call them and tell them to give it to me in writing.

"I went back to Barings with that communication and within ten minutes I had it in writing that my client's assets were out of it, that the fund's assets were safe. That was a big help.'' People ask her repeatedly about Nick Leeson, now serving six and a half years in a Singapore prison.

"He's been the least of my worries,'' she said. "He was a rogue trader, gone berserk. That can happen in any company. I don't look to Leeson. I look to the executives in London who moved the money, that is, their corporate equity, from London to Singapore. That, to me, is where the fault lies. You don't move a billion dollars without asking questions.

"The first time they sent money out there to cover losses, something should have happened. But the fact that it kept going and going out there, that was what was unforgivable. Barings should not have done that. What is so perplexing is that the money went out there so easily.

"Barings had three divisions, the brokerage, the banking and the asset management. The asset management had nothing to do with this. It was the brokerage and the banking. It was hard for the asset management people -- the people I deal with -- to understand how their whole life was being turned upside down through no fault of their own.'' So how have the Baring funds performed since the crisis? Mrs. Kast said, "They have held their own. There is one fund that has had a problem, the Global Emerging Market fund, but that was for a number of other reasons. But the rest are right up there, good performers.

Continued on page 39 Barings scandal behind her, Kast's life is back to normal Continued from page 37 They are great on fixed income. One of their large funds is their bond fund, which I use extensively. Even after the ING merger, it remained a three star fund.

"These funds are now under pressure to perform and they are meeting the challenge.'' By June Mrs. Kast said she finally felt the crisis was behind her. For Barings, she said, it will take a calendar year.

"When it gets off the news, that will help,'' she said. "I'll know it's really over when I can attend a social function and nobody mentions it.'' When Barings Bank faced the darkest day of its storied history last February, bank representatives cancelled business meetings with Mrs. Kast in Bermuda.

It was 7 a.m. Sunday morning when she heard the news, while preparing for a road race. She went to the office instead.

"I called Barings right away and got the bad news. I stayed in the office for 16 hours calling people, to make sure people knew what was going on. I went through my entire account list. But calls were also coming into me from people, including from the BMA.

"It was so mind boggling that the only way I could cope with it was to take it day by day. It was such an incredible situation.'' "The short term effect was that it created a lot of unnecessary trauma for investors. You go into these things with the view that the money is going to be safe, and, as it turned out, the money was safe. Until you know that for sure, though, it is a difficult situation.

"Plus, this thing came on the heels of 12 very bad months in the market, so people were kind of tired anyway with battling the bond markets, battling the stock markets.'' By Monday, what was deemed to be at risk was the cash in the funds. The funds were not trading, and the stocks and the bonds were "ring fenced'', not touchable by creditors. But a portion of the cash in the funds was at Barings (Bank) and it was frozen. That was at risk.

The custodians of the stocks and bonds held them in trust for the benefit of the investors. But the cash was part of the deposits at Barings, so the worst case scenario was losing the cash, probably less than five percent of the fund. Then there was a question as to how much cash was in each fund.

By the end of the week, it looked like cash-rich ING would effect a buy out of Barings. Barings had just what ING needed, the asset management portion of the business, the jewel in the crown. It was days after the deal was done before the funds traded again.

Reflected Mrs. Kast, "I lost some clients. I knew that would happen, and understandably so, for people to go through that experience again, after a year of terrible markets.

"But it wasn't many who left. In terms of funds under administration, it was less than two percent. Some just felt they wanted to move on. Small clients were the ones who redeemed, the larger and seasoned investors stayed in, with the markets at its lowest. That was the time to stay in the market, really, and make a decision later. But I understood those who wanted to move on.

"There was about 60 percent of a $70-million portfolio at Barings, when the crisis came. Fortunately, I had been building up relationships with other asset managers, with Barings' blessing.

"I have managers come to see me all the time. They know I have quality business and they want my business. I have good relationships and for example, GT -- and this was not a ghoulish thing at all -- but they called me with some encouragement and offered to switch assets to their funds for free.

"That was good, because I had to reassure my clients that we were going to diversify assets and that it wouldn't cost them anything to do it. In fact, if there were switching fees I would have probably paid for them myself.

"A lot of my contingency plans that I had in my business plan to implement, just got accelerated. I guess that I probably had too much with Barings for too long.'' Because of the nature of the investment business, investment advisors assume there will be a big hit some day. For her firm, it came after three and a half years of explosive growth -- from zero to $70 million.

Back in 1985, she felt unprepared for a family crisis that drained her mentally and physically. She felt it took years to shake off its affects, but through an exercise regimen, including road running, this year she was better prepared.

"After Barings, it took about four months to really get back to normal. We got through it and a lot of that was preparedness.'' ANNE KAST -- Sought assurances that assets were protected.