Baltimore-based commercial bank All First, a subsidiary of First Maryland Bancorp, is looking to enter U.S. dollar interest-rate swaps by year-end to hedge the interest-rate exposure on its USD4 billion liability portfolio. The bank has not used derivatives since the beginning of the year because the introduction of the Financial Accounting Standards Board's rule 133 has deterred it and other end users concerned that being required to mark derivatives positions to market will introduce volatility in the earnings statement.
"We're waiting for the dust to settle," said Robert Ray, senior v.p. in Baltimore. He continued that it will start using derivatives again by year-end. He declined to name potential counterparties but said the bank will chose counterparties according to price. He declined all further comment.
