Banks Offer More Than $60 Billion Towards Fund: WSJ
Banks and other financial institutions have expressed interest in providing more than $60 billion towards a super-sized fund aimed at bailing out structured investment vehicles (SIVs), The Wall Street Journal reported on Sunday.
If these expressions of interest turn into formal funding commitments, organizers would near their goal of raising $80 billion to $100 billion, the newspaper said in its online edition.
Wachovia , Bank of America , Citigroup and JPMorgan Chase , which are putting together the mega-fund, are targeting some Europe institutions such as HSBC Holdings in London and Dresdner Bank in Germany, the WSJ said. Additional details were not immediately available.
SIVs are funds that buy bonds linked to mortgages and other debt and finance their purchases by selling short-term debt known as commercial paper.
SIV's have had trouble funding themselves recently and could be forced to sell billions of dollars of debt into the market to pay back their investors.
The organizers also are planning to approach other non-U.S. banks such as Bank of Montreal and Standard Chartered.
Reuters reported separately that U.K. banks Barclays and Royal Bank of Scotland joined other global banks this month by lining up $30 billion facility from the Federal Reserve to rescue customers with short-term liquidity problems.
Barclays has been given permission to borrow up to $20 billion through the facility while RBS can borrow up to $10 billion, according to data from the U.S. Federal Reserve webtsite.
"Major banks such as ourselves... are encouraged by the Fed to have this kind of facility in place. That's what we have done," an RBS spokeswoman said.
The Sunday Telegraph newspaper had earlier quoted banking sources as saying the credit line was set up as a contingency and may not have to be used at all.
Barclays also said it has a facility ready for clients when they need refinancing.