ABS- Structures, Markets, Threats and Opportunities (ePub)

Bachelor Thesis from the year 2008 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 2,1, University of applied sciences, Munich, 154 entries in the bibliography, language: English, abstract: The general view once was that the financial system has become more stable because risks mainly lay not within the banks balance sheets, but with the investors and further parties involved when structuring and selling structured products such as asset-backed securities. As a result of the re-evaluation of subprime loans and other asset-backed securities structures as the speculative bubble busted in summer 2007, a clear increase in the risk aversion has been observable during the past few months. This, in turn, has caused problems in the interbank market since refinancing costs have increased enormously, so that not only banks are being affected by the breakdown in the US subprime mortgages.

Basically asset-backed securities were thought to carry little or almost no risk while simultaneously bringing in a high return. They were supposed to transform risky assets into riskless ones without minimizing the return.
The objective of this paper is to reveal the difficulties in evaluating and handling the investments in asset-backed securities of German financial institutes, using the example of the Deutsche Industriebank AG.