French banks agree to set up 1 bln superfund: report
ZURICH (Reuters) - Five French banks have agreed to set up a "super-conduit" fund holding $1.47 billion of asset-backed securities early in 2008 to ensure a liquid market for any French mutual funds destabilized by the global credit crisis, the Financial Times reported on Thursday.
BNP Paribas <BNPP.PA>, Societe Generale <SOGN.PA>, Calyon, the investment banking arm of Credit Agricole <CAGR.PA>, Natixis <CNAT.PA> and HSBC <HSBA.L> France have designed the fund as a safety net for investors and issuers in case credit conditions worsen early next year, as some fear.
The Financial Times's French partner publication, les Echos, learned that after months of talks the banks had agreed to launch the fund by injecting 1 billion euros of their own high-quality asset-backed securities into it, the newspaper reported.
Returns from managing the assets will fund the management team and operations.
If sponsors of asset-backed securities face a run on their funds, the super-conduit will buy the securities and issue commercial paper to refinance the assets.
Societe Generale, France's second-largest listed bank, said on Monday it would consolidate its PACE structured investment vehicle (SIV) on its balance sheet. The SIV had total assets of $4.3 billion at the end of November.
The Wall Street Journal reported on Wednesday that some banks which were expected to contribute to a separate, U.S. Treasury-inspired fund to bail out SIVs are losing interest because they doubt the fund's ability to provide a solution to the credit crunch.
(Editing by Erica Billingham)