HSBC Rescues Two SIVs By Taking on $45B

European bank HSBC Holdings PLC said Monday it would bail out its two structured investment vehicles by adding $45 billion in assets to its balance sheet.

Britain’s biggest bank by market value said it did not expect a near-term resolution of the funding problems it and other banks faced with the vehicles.

The vehicles, known as SIVs, are investment pools that rely on short-term funding to finance longer-dated securities. Because of the spillover from the U.S. subprime mortgage-lending crisis, investors have been reluctant to buy the commercial paper on which these vehicles depend, The Wall Street Journal reported.

The London bank said it moved its two SIVs, Cullinan Finance and Asscher Finance, onto its balance sheet to prevent a forced liquidation of what it called high-quality assets.

HSBC said investors in the SIVs would be able to swap their holdings for debt issued by a new company backed by HSBC loans.

The bank said that it did not expect the move to have a material impact on its earnings or capital strength.

HSBC shares closed down $2.20, or 2.6 percent, at $82.54 on the New York Stock Exchange.