HSBC must inject $45 billion to keep funds afloat
The action reminds everyone of Bear Sterns. HSBC must inject $45 billion to keep two funds afloat. Structured investment vehicles, or SIVs, raise money in the short-term commercial paper market and use it to invest in longer-term assets, such as mortgages. Since HSBC is in such a bad position relative to subprime mortgages investors are demanding their money back. HSBC said that investors in Cullinan Finance Ltd and Asscher Finance Ltd — SIVs which are both managed by HSBC — would now be given the option to exchange their existing notes for paper issued by one or more new vehicles set up and funded by the bank’s own balance sheet.
(This update increases prior amount from $35 billion to $45 billion per Bloomberg updates)
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