LONDON — HSBC Holdings PLC, Europe’s largest bank, said Monday it will bail out two troubled funds it manages by transferring about $45 billion of their assets onto its balance sheet.
HSBC said it will also inject $35 billion into the two funds, Cullinan Finance Ltd. and Asscher Finance Ltd., in a move that will clarify responsibility for the funds and prevent liquidation of assets.
The moves are another symptom of a global credit crisis that has forced up the cost of short-term lending.
The funds are structured investment vehicles, or SIVs — bank-sponsored businesses that sell short-term debt such as unsecured commercial paper to investors such as hedge funds. They are bank-sponsored businesses that have been operated off the bank’s balance sheet.
The banks use the proceeds to buy longer-term assets like mortgage-backed securities.
SIVs normally generate money through fees and the difference between short- and long-term rates.
