BMO, TD and US Bancorp hit by out-of-the-money goodwill hedges
Derivatives meant to offset dilution of capital in acquisitions turned loss-making as yields temporarily slumped
A temporary compression in global yields between October and January caused Bank of Montreal, TD Bank and US Bancorp to incur heavy mark-to-market losses, after hedges against capital dilution in acquisition deals turned into loss-making trades.
Financial results for the period show that while in the process of acquiring, respectively, Bank of the West, First Horizon Bank and MUFG Union Bank
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