Geoff Walduck

History and human nature tells us that the vast majority of investors- including the professionals- underestimate risk. The words- That is never going to happen are often followed up later by - Why didn't someone see that coming. As for Virgin -I remember someone remarking many years ago that over time airlines have destroyed more wealth than a world war. Virgin is just part of that long history. We cannot afford to see another case of capitalising the profits and socialising the losses. Good to see the Federal Govt and Super funds standing back and assessing the risk.

Mark McLaughlan

So where do bank hybrids sit in this world?

Jonathan Rochford

Thanks Geoff and Mark for the comments. Bank hybrids do have a place as an alternative to owning ordinary equity in a bank under some circumstances. They're not a substitute for term deposits or investment grade credit. For institutional investors that focus on long term returns, non-LMI securitisation is a superior form of accessing the same sort of systemic credit risk that bank hybrids have. These can offer both lower risk and higher returns, with less complexity and negative optionality. In short, better value elsewhere.

Emma Davidson

Thanks for the contribution Jonathan, insightful and educational.