CPM desks split on whether to reap windfall on hedges

The financial crisis has breathed new life into an old debate – the extent to which bank credit portfolio management (CPM) functions should seek to cash in on spread widening by closing positions early. It’s an issue that goes to the heart of what CPM is about – protecting against losses or helping a bank make profits.

“This was a huge issue for the industry at the height of the crisis,” says Sean Kavanagh, head of the loan exposure management group at Deutsche Bank in New York. “In the first