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Breakingviews: Banks swap rewards for risk on public deals

Wednesday, April 09, 2014 - 04:23

April 9 - Investment bankers are wising up about reputational risk. Deutsche Bank and UBS are now loath to offer long-dated swaps to municipalities. Derivatives and the public sector remain a toxic combination.

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A couple of stories breaking news we're gonna discuss this morning with Robert cold investment bank is winding up our reputation risk and and aside and some sort olive oil and in Spain who come to -- a second. I'm tennis I was banking piece for us -- out of it's it's a I don't selling swaps to the public set to. And I swaps. I'm relatively. Commonplace. Kind of financial instrument but I use ball. And and all the interest and I wish Bobby fix strikes for one of the -- tonight and that can be done with the cross attached to it relatively strike full of welcome -- lets you strike force. Kind of they'll look all sorts of institutions. Companies. Public and private sector would want to get involved with an -- on surprisingly mean municipalities public sector clients. Have have commercials of comparisons as well and over many many years have done these kind of -- They think is so -- clot in his not a big amounts from binding the banks aren't -- about some nice work it down by don't like that it. She's in that unit that parents had just sort of withdrew roaring from the swine. Well that calls. The balance between the risk in order of course is always a risk reward seems to -- shift. It is it isn't about how the new rules on swaps Basel III exception or is it that danger of doing deals with public. -- it's it's about I think the new capital rules to make it more difficult for banks to uncertainties content deals. But the more hopeful the more telling Palin may be the thing that really sort of is the store that breaks the camel's back here is that it is -- isn't it seemed to and they might win Dolan might lose only that -- back. -- -- I don't take I don't uses the ramseys almost Detroit is one of them. Ten years a number of them. Absolutely and and the way that the that the legal process seems to be good thing is that -- for the bad accidents. Tiles on ice and limbs had you waited so good -- if but if the deal goes against. The municipality in that happens I lose money the bank has to pick up the bill but it. It unit the bank. High altitude like kind of the way it was of them -- about the benefits they get that as well closest you know if you if the low and they contracts are going to be. As it was exciting to read tough enough time. You know you commented to materials and on top of -- of that it's inevitable whether it's in public sector institution. Thus his -- bank the bank is gonna come off -- come back. Okay fast -- context however stomachs peace calm which you front on the breaking news outside -- -- -- all I want is a power. Deal earlier the world's top olive oil -- There's been lots of interest in this company CDC. That the UK private equity is one of us as an amateur it seems to be getting in on the game. And you'll correspondent in Spain. Doesn't -- that I did. It's. Yes it's very very -- one here is -- that the Spanish authorities in the thing that olive oil it's 99 national. Strategic asset. Clearly it's very important product -- -- but it seems to be one for us that can exist outside the public sector and outside. The united. And it's not strategic sources say for the Scottish government but I did play ability is also. Doesn't need states' support and actually might not benefit from state support. Backstop let leaving it as this one living in the in this in the private sector on the what was laissez Faire economists would say united you know the state should stuff -- -- -- that -- -- very important role in the state as the Bloomberg poll role for example. Real organizing the the Spanish banks but. You know you need to Soul Asylum -- that this is -- -- you know I think that. It's Biden that it does not come just need to get involved and we've got to do that come pretty good I'm you know. One. Only this one to CDC to battle out in the front. -- -- from a many thanks for that Robert Koehler of suffering movies you watch abbreviation. Breaking view shows of course on the long on the was inside a powerful. -- -- -- -- --

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Breakingviews: Banks swap rewards for risk on public deals

Wednesday, April 09, 2014 - 04:23