Losing Sleep Over Banks

QUESTION:

Hello Martin,

If i have exposure to various banking counterparties in europe – what do i do from running a fund mgmt business as i m a bearish on banks….but i cant shut my business as i m fearful of banks…..what do you advise….how can one hedge or think about getting away from this risk?

This is really keeping me up at night.

tks again

ANSWER: Yes, you could also use Bank of New York, which is just a custodian; National Australia Bank or Macquarie are secondary choices. Alternatively, you could use the REPO market directly or use one of the clearers via the Tri-Party agreements! He could use a GMRA (Global Master Repo Agreement) and decide who his counterparties can be (i.e. Pimco, Easyjet etc.), but use the exchange as the mediator.

There is a company (Alixium – part of the Tradition Brokerage Co) that has a web-based cash exchange, which I believe works on similar principals but it is also possible to deposit GBP then change the criteria of capital and accept X-Currency assets (USD, A$ etc).

There are lots of ways around… No need to lose sleep over this. I do like Bank of New York because it is a custodian and very conservative.