Derivatives disaster to play out in court

Last year a number of banks reached settlements with Portuguese state-owned firms over disputed derivatives trades. But there’s some unfinished business with Banco Santander Totta, and it’s slated to play out in court, reports Risk.net.

Read: Portugal hauling banks to court over derivatives trades

“The counterparty stuck on the wrong end of the trade is Portuguese state-backed rail operator Metro do Porto (MdP), which entered into the €89 million amortising fixed-for-floating interest rate swap in 2007. Halfway through the contract’s life, the firm is now out-of-the-money to the tune of €459 million,” the report explains.

One expert described the arrangement as “nonsensical.”

“I’ve seen some badly structured products sold to clients in my time, but this one takes the biscuit,” the source told Risk.net.

Read more here.

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OSC changes derivatives reporting deadlines

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