Optimising hedging

Since losing around $157 million in 1994, and becoming embroiled in concomitant litigation, Procter & Gamble's treasury has remained tight-lipped on risk management. Risk gives readers an exclusive glimpse into the inner workings of the group. By Jayne Jung.

Procter & Gamble (P&G), the consumer products giant, conjures up images for the consumer of familiar hygiene goods such as Crest toothpaste or Pantene shampoo. Those working in the financial markets, however, are likely to have a somewhat different impression. In November 1993, the Cincinnati-based company's treasury entered into a complex interest rate swaps trade with New York-based Bankers Trust - a dealer at the forefront of the derivatives industry in the early 1990s, eventually taken over