Citigroup said last night that it plans to take $49 billion (€33.5 billion) of structured investment vehicle (SIV) assets onto its balance sheet to prevent their ratings downgrade.
Citi said it is supporting a government-endorsed plan to set up a backup fund for SIVs, but analysts said that fund is less likely to be set up without Citi's SIV assets.
Citi is the latest bank to move SIV assets onto its balance sheet after the vehicles have been criticised by a lack of access to funding and a slide in the value of their assets, which include repackaged consumer debt.
It also follows the appointment on Tuesday of a new management team led by Chief Executive Officer Vikram Pandit, a former hedge fund executive who was then put in charge of Citi's investment bank.
Citi's decision to take assets onto its balance sheet comes amid broader turmoil at the bank. The company's shares have fallen 44 per cent this year, about double the decline of the broader banking sector, amid concerns about credit losses and profit growth.
Citi earlier this year had over $100 billion of assets in SIVs, or off-balance sheet vehicles that buy longer-term assets and issue short- and medium-term debt to fund themselves.
That $100 billion represented about a quarter of all outstanding SIV assets but has since shrunk by half as Citi's vehicles have sold assets.