When experiments don’t pan out September 7, 2013 at 6:02 am

With merely a high end modern lens (the stunning 31mm Pentax limited), a digital camera and photoshop, I managed to produce something that looks like a bad example of a 1910 Bromoil process print. Ah well, better luck next time.

Sun on wood

2 Responses to “When experiments don’t pan out”

  1. Hi David,

    This is very unrelated but I thought you might help me understand the banking model of having a bank in an offshore jurisdiction for tax purposes. In effect, Mauritius is used by a couple of international banks(Investec, Deutche Bank) to book the loans in their book here for obvious reasons.

    The balance sheet is funded mainly by fickle current accounts that have a maturity profile of less than 12 months mainly and the loans book is obviously longer term.

    How does this mismatch work? How does the bank manage those very wide maturity profiles while mitigating liquidity risks? Is it just a question of the banks knowing those funds will always be there albeit from different clients? Trying to understand the funding mechanism and hope you can shed some light.

    Thanks

  2. “Is it just a question of the banks knowing those funds will always be there albeit from different clients? ” Yeah, basically.

    You have two issues in this situation – interest rate risk (the funds are there, but the rates you have to pay on depos rise and you are stuck with longer term fixed rate assets so NII compresses) and liquidity risk (the depos go away).

    The former you hedge with e.g. caps or IR options. The latter you either pray doesn’t happen (with deposit insurance a big run on depos is unlikely provided you are paying the market rate) or assume that you will inject funds from group treasury (which has a big buffer of high quality assets it can repo out) if it does.