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Survey names debt derivative as riskiest financial product

´╗┐BRUSSELS, March 15 Beware the credit default swap on certain government bonds. Credit insurance on some sovereign debt is the riskiest financial product out there, posing the greatest threat to investors who buy them and potentially to markets, said a survey aimed at finding the world's most dangerous financial product. Almost half of the 2,000 people, including financial experts, who participated in the online survey named credit default swaps on government bonds in emerging markets as the "most dangerous" financial product. The survey, the results of which were released on Friday, was organised by Sven Giegold, a German member of the European Parliament who has played an influential role in EU financial reform.

"This result shows that there are still a lot of dangerous financial products. European supervisors need to take the situation more seriously," Giegold told Reuters. Anyone could participate in the survey although it was aimed at financial experts to gauge their views on which financial assets posed the most risk to investors and markets as a whole.

The survey was prompted by concerns that although many of the riskiest financial products, such as multi-tiered synthetic CDOs (collateralised debt obligations), unravelled when the 2008-09 global financial crisis struck, many others remain in circulation. Credit default swaps are a form of tradeable insurance against the non-payment of debt, such as a corporate or government bond. At the height of the crisis, their price climbed for countries such as Greece, exacerbating borrowing difficulties.

Giegold hopes his competition will spur supervisors and regulators into taking more action, such as banning certain high-risk products."There are so many toxic products out there that identifying the worst one is tricky," said Frederic Hache, a former banker who sold structured products and now works for Finance Watch, a public-interest group that seeks to influence regulation."Some of the key factors that caused the crisis, however, are not linked to specific products but rather to the architecture of the financial system," he said.

Turkish loan growth to slow in q4 banking association

´╗┐ISTANBUL Nov 14 Turkish banking sector loan growth was expected to slow in the fourth quarter, Turkish Banking Association General Secretary Ekrem Keskin said on Thursday."The banking watchdog BDDK and the central bank signals show that the pace of loan growth will slow in the fourth quarter," Keskin told reporters."Recent additional steps are pulling down banking sector profit," he also said.

The country last month introduced measures to control rampant consumer loan growth and lift its domestic savings rate from historic lows, another front in its battle to reduce a gaping current account deficit.

The regulations introduced by the BDDK banking watchdog focus on trying to curb debt-financed consumption by making credit card loans more costly for lenders and tightening spending limits for consumers.

Turkey has seen explosive consumption-led growth over the past decade, with per capita wealth almost tripling in nominal terms, but its low savings rate and huge energy deficit have made it heavily dependent on volatile foreign capital flows. Consumer loan growth ran at around 24.6 percent in the first nine months of the year, well above the central bank's 15 percent reference rate, while the savings rate dwindled to record lows of 12.6 percent of output.