Standard Chartered abandoned plans to support its SIV, which is already in receivership. It is likely to default on its February 15 payment (it has three business days to cure the default).
While this development is not expected to hurt either the bank or the marketplace, it’s another indicator that some institutions are less concerned than in the past about preserving their reputation.
Standard Chartered on Wednesday dropped initial rescue plans for its $7 billion Whistlejacket structured investment vehicle which was forced into receivership last week, drawing criticism from analysts.
Asia-focused bank Standard Chartered said its decision to drop the plans was the result of a number of factors including “the pace of continuing deterioration in the market for certain asset classes”.
Receivers Deloitte said they were continuing to work on a potential restructuring and emphasized that a fire sale of Whistlejacket’s assets was not under consideration.
Other banks have stepped in successfully to rescue their SIVs, which raise short-term debt and invest the proceeds in longer-term securities.