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A Cornish gamble

A Cornish gamble

Any time markets adjust to a different price level, no one feels it more than those who sold options on the market beforehand. They learn whether the premium received justifies the pain they might feel today.

Giants of the S&P500

In 2015, size equalled success in the stock market. But did benchmarking make this a self-fulfilling prophecy? Let’s start by looking at the market capitalisation of S&P 500 companies at the end of the year, with colours according to price change.

High yield’s retrenchment

High yield's retrenchment

There have been plenty of words written about the high-yield corporate bond market in the last week, but sometimes a chart expresses things better than words.

Newham’s cracked crystal ball

LOBO bubble chart image

New information on the council’s controversial loan portfolio shows the impact of its relationship with Barclays, raising questions about risk management decisions

Client blow-ups and lawsuits over the years have taught banks a lot about selling complex products. Some take a two-step approach. First, the bank provides its customer with a ‘risk management tool’ … Continued


Volkswagen factory

Just over two years ago, I took a train from Berlin to Wolfsburg, to visit a senior executive at Volkswagen. From the station platform the famous chimneys of VW’s vast car plant loomed up. Inside the gate, the company’s vehicles were everywhere, catching the sun like a metallic sea. It crossed my mind that it … Continued

The eternal Greece of the financial engineer’s mind

Exactly 12 years ago I wrote about a Greek disappearing act: how in 2001 the country concocted a swap deal with Goldman Sachs to conceal almost €3 billion of debt from its national accounts, to help meet Maastricht ratios. This story refuses to die: a former Goldman banker recently suggested that Greece sue the bank … Continued

Unravelling LOBOs

Unravelling LOBOs

A few weeks ago, I was with Channel 4 Dispatches reporter Antony Barnett speaking to Sheffield Labour MP Clive Betts. We were on a park bench in some gardens next to the Houses of Parliament and we briefed Betts about our findings on Lender Option Borrower Option (LOBO) loans to UK councils – findings that … Continued

LOBO exposure of UK councils

Map of UK LOBO exposure

For Channel 4 Dispatches, we used Freedom of Information requests to build a database of 46 UK councils with details on almost 600 individual contracts, accounting for £7.3 billion of LOBO loans – almost half the UK total. Working with derivatives expert Abhishek Sachdev, I calculated the value of the derivative embedded inside each contract … Continued

How Newham came unstuck with inverse floaters

Inverse floater animation

In my research for Channel 4 Dispatches, I broke through Newham council’s wall of secrecy and learned that the council had at least £150 million of inverse floater LOBOs (believed to be with Royal Bank of Scotland), along with other councils such as Cornwall, Edinburgh and Newcastle that disclosed these RBS products in response to Freedom of … Continued