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In “That’s cute from a product development perspective but how did your regulators sign off on it” news, a Japanese bank has just introduced a CD which you purchase before the season which pays 1% APR if an underdog wins, 0.50% if they take 2nd or 3rd, and 0.02% otherwise.
I actually kind of love competing with sports betting and similar negative sum behaviors for banks, but I have to believe a lot of the serious people involved would not love that.
I wonder whether the bank hedged their exotic exposure here with an insurance company? “Hey can you make odds on an underdog winning a sports season.” “Heavens no, sir, do you take us for bookies?” “Oh it’s not that we’d actually suffer a loss if they won.” “Oh in that case.”
