Collateral thinking
Regulators are looking into how investment banks manage their collateral. The UK Financial Services Authority has begun an investigation, and other supervisors are set to follow. By Alexander Campbell
Within the next few months, the UK Financial Services Authority (FSA) will release new guidance - probably in the form of an advisory letter to chief executives - on collateral management. With a downturn in credit quality widely expected, the superstructure of complex financial products built up by investment banks over the past five years will come under its first real stress. And the FSA is increasingly concerned that, in the area of collateral management at least, banks may not be ready to
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