UBS, Barclays and other European lenders may not be able to “wash their hands” of the special firms they set up to issue U.S. mortgage-backed bonds and collateralized debt obligations, CreditSights said. European institutions may support the so-called special- purpose entities, even though they were designed to have no recourse to the banks in the event of losses, such as those stemming from the slump in the subprime market, analyst Simon Adamson in London told Bloomberg News.
Banks and asset managers in Europe sold 58.8 billion euros ($79.9 billion) of CDOs this year, 104% more than the same period a year ago, according to data compiled by Deutsche Bank. Deutsche Bank in Frankfurt, Barclays, BNP Paribas and Royal Bank of Scotland “almost unbelievably” don't mention CDOs in their annual reports, Adamson said.
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