Hybrids - The alchemists

Much like the early scientists of the Middle Ages who tried to turn base metal into gold, today's financial engineers are wrestling with the task of changing relatively worthless structured credit products into commercially viable and marketable assets. Their answer is to add exposure to another asset class - equities, say, or interest rates - thereby providing much-needed upside. Will these repackaged hybrid products succeed or prove to be fool's gold? Sophia Morrell reports

Six months after it began, the ramifications of the credit crisis still loom large in the financial press. Each day brings further revelations of billions of dollars worth of writedowns and losses by major banks. For some participants, holding on to not just their clients but their jobs depends on finding ways to minimise those sums. However, some of the industry's best innovations can arise when banking minds are put under stress - and it would be difficult to imagine a more stressful