Volatility, correlation and dividend losses sting banks


Volatility and deals based on dividends joined correlation as a major way for banks to lose money in the third quarter of 2008. Like losses on correlation in the first quarter, it remains true that the bigger the structured products operation, the bigger the loss.

"We lost money in two areas: dividends and correlation/volatility," says one London-based head of structured products at a US bank. "Every dealer was effectively the same way, and when there are big, simultaneous moves in the market and

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