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Norddeutsche Landesbank, a regional bank for the German states of Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania, has entered an interest rate swap on a recent EUR1 billion (USD1.07 billion) bond offering to convert it into a floating-rate liability. Thomas Hofermann, syndicate manager at the bank in Hanover, said it entered the swap because it did not want to carry the interest rate risk for the 10-year maturity for the bond. The bank does not convert all fixed rate issues.

"Within 12 months, this will be a big market."--Stefan Armbruster, head of equity structured products for Germany and Austria at ABN AMRO in Frankfurt, commenting on the future of the retail market for structured credit instruments. For complete story, click here.

Goldman Sachs has reportedly lost USD5-7 million on a collateralized loan to an individual at a Taiwanese corporate after shares it held to back the transaction plummeted. The investment bank loaned an undisclosed amount to a senior official at Chou Chin Industrial through its private bank and accepted shares as collateral, according to a Goldman official. The shares plummeted from a high of NTD30.90 (USD0.89) on March 5 to NTD3.74 Wednesday after Kuo Pao-fu, chairman of Chou Chin, admitted last month to using company funds to drive up the stock price. Edward Naylor, a spokesman at Goldman in Hong Kong, declined comment.

HSBC, which has the largest dealing room in Hong Kong, moved around 50 of its 300-plus treasury and capital markets staff to a makeshift parallel trading desk Monday to ensure the firm can keep an operation running if the SARS virus infects the main trading floor. "We've put them on a separate floor," said Pierre Goad, spokesman. "We're also looking at further contingency plans, such as using locations in other countries," he added.

Lehman Brothers has hired Craig McCauley, head of global fixed income at BT Funds Management in Sydney, as head of emerging markets bond and currency sales in London. McCauley is taking a new position that has been added as part of the firm's increasing focus on marketing emerging market debt and currency products. He said he will be marketing both cash and derivative credit, fixed-income and currency instruments.

The delta of an option is frequently considered to be the same as the probability that an option will be exercised, i.e., the probability that the option will be in the money at maturity. There is, however, a difference, especially when it comes to long-dated options on volatile stocks.

Algometrics, a London-based alternatives investment house, is closing and has returned the remaining USD85 million to investors. Stephen Smith, founder and managing director in London, said the firm and its managed fund, Algometrics Ltd., is winding down because it was having trouble raising additional capital. "It had become difficult to make money in a systematic way," he said, adding that the fund was not making the 15-30% returns that hedge fund investors demanded before they would contribute funds, declining to comment on the funds' performance. The fund, which specialized in statistical arbitrage and other quantitative trading in equities and fixed income, moved all its capital into cash in January after it stopped trading in Europe.

Nick Sheppard, executive director of the institutional equity division at Morgan Stanley in Tokyo, is leaving the firm to take a sabbatical, according to officials at the firm. Sheppard reports to Shawn Bardong, managing director and head of trading in Tokyo. Bardong declined comment and Sheppard could not be reached. Officials continued that the existing staff will handle Sheppard's duties, declining further comment. Simon Locke, spokesman, declined comment.

The Royal Bank of Scotland has hired Neil Murray, single-name credit-default swap trader, and Colin Macintosh, leveraged funds salesman, both from Commerzbank Securities, to bolster its capital markets team. Stewart Booth, global head of credit trading at RBS in London, said the hires were part of the bank's expansion plans for capital market products.

The euro/dollar risk reversal moved further in favor of euro calls as investors snapped up volatility. Six-month 25-delta risk reversals jumped to 0.78 vol Thursday from 0.55 vol on Monday as one investor bought a USD250 million euro call/dollar put struck at USD1.13 and sold a USD250 million euro put/dollar call at USD1.0250. The trade was executed when spot was at USD1.08 at a price of 0.6 vol. A similar trade was executed later in two USD350 million legs at a vol of 0.7750. In this trade, the investor bought a euro call/dollar put struck at USD1.15 and sold a euro put/dollar call struck at USD1.

UBS Warburg has hired Reinhardt Olsen, head of the institutional services group for international clients at Merrill Lynch, as an executive director and client relationship director for its fixed income, rates and currency group in New York, a newly created position that includes derivatives. Terrence Keeley, managing director for North American client relations at UBS, said Olsen, who reports into him, is experienced and well known in the fixed income universe, having worked in a variety of senior roles. Olsen, who declined comment, was previously head of high grade corporate banking at Merrill and has also worked as head of the U.S. debt market and integrated bank business at the firm. At UBS Olsen will focus on depositary institutions, said Kris Kagel, spokesman in New York.

Armajaro Securities, a structured products boutique, is seeking derivatives sales professionals to net more business from institutional clients increasing use of fixed income and equity products. Helmut Kleinschrod, head of trading in London, said the firm already has an adequate structuring team in place, but is looking to add up to three sales professionals who have well-established institutional clients. "We need sales people because we need clients, because that's where the capital is," Kleinschrod said.