Universities invest in derivatives, speculate on interest rates
Monday 23 July 2012
Dutch universities are faced with losing tens of millions of euros from their investments in complicated interest rate-based products, the Financieele Dagblad reports on Monday.
Amsterdam’s VU university, for example, could be hit by an €80m loss because of its investment policy, the paper says. And Leiden University lost €1m a year for the past three years on its derivative investments.
The FD’s research shows half the country’s universities use derivatives to cover the interest they need to pay on loans. However, the VU and Leiden have invested in derivatives to shore up loans which they may take in the future. This is 'speculating with government cash,' an education ministry spokesman told the paper.
Education ministry inspectors are now looking into the investment policies operated by universities and colleges.
Earlier this year it emerged some housing corporations are faced with serious debt because of their investments. Worst affected is Rotterdam corporation Vestia, which is faced with a loss of €2bn.
Waterboard-owned silt processing group Slibverwerking Noord-Brabant has lost €200m on its derivative-based investments.