Nervous banks worried that some of their masters of the money pits may be tempted to exceed permitted limits in financial or futures markets now have to option to insure against the sort of rouge wheeler-dealing which bankrupted Barings Bank in 1995. Lloyd's of London, the leading British insurance underwriter, has just initiated a scheme which will provide cover for losses of at least £100 million, an insurance innovation believed to be the first of its kind.

Lloyd's new policy will apply to traders who have made commitments in excess of permitted loans, traded in unauthorised instruments or traded with unapproved dealers. To qualify for cover banks must prove that the necessary internal controls are in place. Rogue traders are often pushed to outperform the market, cover mistakes or make up for earlier losses, tempted by high commissions and high bonuses.