As $150 billion General Electric Co. grew its business and expanded its book of derivatives used for hedging foreign currency and interest-rate exposures, the number of highly rated counterparties with which it could do business remained static. That meant that GE, by 2004, was approaching credit thresholds, and expected future growth could pose problems. If GE reached the limit on the credit exposure it could have with a given derivatives dealer, it might have to cut back on trading with that counterparty to stay within its exposure cap. If the bank with which it was trading derivatives contracts reached its limit on credit exposure to GE, the bank would have to allocate more capital to back up additonal exposure–a cost it would pass on to GE. “Our existing structure could have limited GE treasury’s ability to hedge efficiently,” notes Dennis Sweeney, deputy treasurer.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

 

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2022 ALM Global, LLC. All Rights Reserved.