Standard Chartered May Lend $7.15 Billion to SIV

Standard Chartered May Lend $7.15 Billion to SIV

Jan. 31 (Bloomberg) -- Standard Chartered Plc said it may lend as much as $7.15 billion to its Whistlejacket Capital structured investment vehicle and take on the fund's assets.

Standard Chartered will support the SIV by buying its commercial paper, the London-based bank said in a statement today.

Banks led by HSBC Holdings Plc and Citigroup Inc. have stepped in to support their SIVs after the collapse of the U.S. subprime mortgage market caused the prices of the funds' assets to decline. SIVs, which use short-term borrowing to invest in longer-dated assets, have reduced their holdings by more than $100 billion from a peak of $400 billion last year, according to Moody's Investors Service.

``Standard Chartered does not anticipate that the provision of the commercial paper facility will have a material impact on its 2008 earnings or capital resources,'' the bank said in the statement. The lender wrote down $46 million of investments linked to Whistlejacket last year and said in December that additional charges on the fund may reduce 2007 profit.

Whistlejacket's assets have fallen to $7.15 billion from $18.2 billion at the end of August as it sold holdings to investors in its lowest-ranking debt, the statement said.

Standard Chartered will provide the funds if investors agree to remove triggers that could force the SIV to appoint a trustee under rules designed to protect bondholders.

SIVs are structured with rules that that limit their ability to raise debt or buy assets when the value of their holdings falls below preset levels.

BLOOMBERG