Make money from the crisis

Author: | Published: 1 Dec 2008

Over the course of the last year the financial markets have been under severe stress as a result of the credit crunch. As is well known, weaknesses inherent in the global financial system have led to the collapse or bailing-out of a number of financial institutions and a dislocation of the interbank funding market. As a result, financial markets and institutions are in the process of unprecedented structural change. Governments across the world have taken, and continue to take, a variety of extraordinary measures to restore confidence in the global financial markets and save financial institutions from collapse. These include equity capital injections, guarantees of bank liabilities and the acquisition of illiquid assets from banks.

Despite the obvious difficulties that financial institutions face, a number of opportunities are being created by these measures.

Bank capital initiatives Maintaining sufficient amounts of equity capital is central to the stability of individual banks and...