The Heard on the Street column in today’s Wall Street Journal focuses their spotlight on billions of dollars in off balance sheet debt financings common at many banks including Citigroup. ‘No problem’ says Citi….
The investment vehicles, known as "conduits" and
SIVs, are designed to operate separately from the banks and off their balance sheets.Citigroup, for example, owns about 25% of the market for SIVs, representing nearly $100 billion of assets under management. The largest Citigroup SIV is Centauri Corp., which had $21 billion in outstanding debt as of February 2007, according to a Citigroup research report. There is no mention of Centauri in its 2006 annual filing with the Securities and Exchange Commission.
Yet some investors worry that if vehicles such as Centauri stumble, either failing to sell commercial paper or suffering severe losses in the assets it holds, Citibank could wind up having to help by lending funds to keep the vehicle operating or even taking on some losses.
Tags: Citigroup, Credit Crunch, Off Balance Sheet Financings
