Greenclose v National Westminster Bank plc: Difference between revisions

Greenclose v National Westminster Bank plc (view source)

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 ====The Loan and the interest rate hedge====
-Mr. Leach, of Greenclose, was one of those fabled little old ladies of the law. He was also, the court found, a sophisticated and successful owner of family business running small luxury hotels in and around Wales. But he also seemed to be the wrong end of  the [[interest rate swap mis-selling scandal]], wherein NatWest and others lent to mid-sized corporates on condition that they enter a derivative to their hedge interest-rate risk. In Leach's case, Greenclose was obliged to buy a rate collar for five years, and to grant the bank an option to extend it for seven years.
+Mr. Leach, of [[Greenclose]], was one of those fabled little old ladies of the law. He was also, the court found, a sophisticated and successful owner of family business running small luxury hotels in and around Wales. But he also seemed to be the wrong end of  the [[interest rate swap mis-selling scandal]], wherein NatWest and others lent to mid-sized corporates on condition that they enter a derivative to their hedge interest-rate risk. In Leach's case, Greenclose was obliged to buy a rate collar for five years, and to grant the bank an option to extend it for seven years.
 The notional point of the hedge was to protect Greenclose against interest rate rises over the term of the loan: interest rates being an uncommonly low 4.5% in 2006, and generally expected, in those good old days, to shortly rise.