Billions of euros of public funds were invested in systemically important institutions in order to sustain them at the height of the crisis. This was deemed an absolute one-off bail-out and the Financial Stability Board (FSB) introduced a proposal to end ‘too-big-to-fail’. Does this proposal effectively protect the tax payer or are we simply paying the burden in advance?
The playing field for businesses has changed and become more dynamic in the wake of the financial crisis and recovery since 2008. Together with financial scandals, caused by fraud or misunderstood hedging techniques and products, more attention than ever is given to appropriately managing corporate financial risk.
When it comes to interest-rate risk management, it is quite common for corporates to have a rather static interest-rate risk policy in place which dictates, for example, fixing the interest rate for a pre-specified percentage of their (future) funding needs, without any fundamental reasons. So how can corporates improve their interest-rate risk management policy?
While Basel III may restore the health of the financial markets and the banking industry in the long run, it will also have an impact on the real economy and business in the mean time. The economic impact of Basel III is often mentioned, but seldom analyzed in detail. This article assesses the potential impact of Basel III on companies and outlines some options that corporate treasurers and bankers can explore in order to minimize the effects.
Put and call options are quite well known among a large crowd. The ‘straddle’ however, is less familiar to the general public. It became famous after its (mis)use by Nick Leeson, which caused the bankruptcy of Barings Bank in 1995. In this article the structure of a straddle is discussed, as well as the opportunities and dangers of this product.