US bank Citigroup said last night it planned to take $49 billion of structured investment vehicle assets onto its balance sheet, to prevent ratings downgrades of the SIVs and fire sales of their assets.
The bank said it was still supporting a US government-backed plan to set up a back-up fund for SIVs, but analysts said that fund was less likely to be set up without Citi's SIV assets.
Citi is the latest bank to move SIV assets onto its balance sheet, after the vehicles have been slammed by a lack of access to funding and a slide in the value of their assets, which include repackaged consumer debt.
It also follows the appointment on Tuesday of a new management team led by CEO Vikram Pandit, a former hedge fund executive who was then put in charge of Citi's investment bank.
Getting a handle on Citi's billions of dollars in risky assets, which include the SIVs, is seen as one of his key mandates.
The company's shares have fallen 44% this year, about double the decline of the broader banking sector, amid concerns about credit losses and profit growth.
Citi earlier this year had over $100 billion of assets in SIVs, or off-balance sheet vehicles that buy longer-term assets and issue short- and medium-term debt to fund themselves. That $100 billion represented about a quarter of all outstanding SIV assets, but has since shrunk by half as Citi's vehicles have sold assets.
