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HSBC Moves SIVs, Structured Investment Vehicles, Onto Balance Sheet. The biggest bank in Europe, HSBC, says it will bring $35 billion of affiliated SIV assets onto its balance sheet, supporting the assets of Cullinan Finance Ltd., one of the largest SIVs, and Asscher Finance Ltd.. HSBC tells the Wall Street Journal, "The SIV sector has been under significant funding pressure since July 2007, as evidenced by the inability of most SIVs to fully roll over their senior funding in the form of commercial paper or medium term notes." Bloomberg quotes Stuart Gulliver, CEO corporate and investment banking, "HSBC's actions will set a benchmark and restore a degree of confidence to the SIV sector, while providing a specific solution to address the challenges faced by investors in Cullinan and Asscher." The Journal article adds, "[T]he new vehicles will be funded either by commercial paper backed by a 100% liquidity facility, or by term financing, both to be provided by HSBC itself." HSBC will allow investors in Cullinan and Asscher the "option to exchange their existing income and mezzanine notes for notes issued by one or more new vehicles," says WSJ. S&P recently said rated money funds own $6.34 billion in Cullinan debt, the second largest SIV program exposure. Asscher was not listed among holdings.
