NatWest lost £90M on interest rate options — Kyriacos Papouis's rogue trades

NatWest (National Westminster Bank) was one of the UK's largest banks, part of the 'Big Four' clearing banks. In 1997, the bank's treasury operations in London included a desk trading interest rate options — derivatives that bet on the direction of UK interest rates.

Trader Kyriacos Papouis was responsible for NatWest's interest rate options book. He built up a large, unauthorized position in interest rate options that exceeded his trading limits. When interest rates moved against his position, the losses mounted to approximately £90 million ($150 million).

The loss was discovered by NatWest's internal risk control team and reported to the bank's senior management. The Serious Fraud Office (SFO) launched an investigation into the incident. The scandal was one of several rogue trader incidents that hit UK banks in the 1990s, alongside Barings and Morgan Grenfell.

NatWest survived the loss, but the incident contributed to the bank's reputation for weak risk management. The case became a textbook example of how a single trader in a relatively small desk can generate outsized losses when internal controls are weak.