Of Special Interest
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
2nd March 2012
No payout on Greek CDS - official - challenge possible
The International Swaps and Derivatives Association EMEA Determinations Committee voted unanimously that no credit event had occurred in relation to Greek government bonds. The effect is that those organisations prudent enough to hedge their Greek bonds with Credit Default Swaps will not be paid out.
There is absolutely no surprise by anyone by the decision. Core to the Eurozone member countries bailout of Greece was the determination to avoid a credit event because no one is sure how this could be managed exactly.
The matter can be referred back to the committee under certain circumstances. Whilst the Eurozone countries can lean on their own banks to accept the so-called voluntary writedown of Greek debt there are other holders of Greek debt less pliable. In particular there is the possibility of a claim for a 'restructuring credit event'. This is defined as an event where "a reduction in the amount of principal or premium payable at maturity or at scheduled redemption dates" occurs. The distinction claimed to date is that the reduction has been a voluntary one and therefore does not fall into this category. Renegades may claim it was not voluntary at all. CDS rules vary as to the level of part payment that would stop their need to pay out.