Following is a letter sent to the Editor of the Financial Times:
Sir,
What Citigroup´s overnight debt growth demonstrates is that the off balance sheet activities, which were accounted for in that way, were not truly off balance sheet ("Citigroup’s SIVs" Financial Times December 14, 2007). That is to say that the capital base reported was overstated.
Will someone be looking into the decisions made where debt is treated as off balance sheet when times are good and are back on the books when times get tough?
Onésimo Alvarez-Moro
See article:
US bank Citigroup has said it will take control of seven investment funds worth $49bn (£24bn) as it continues to ride out problems in the financial markets.
By taking control of seven structured investment vehicles (SIVs), it hopes to help the funds pay off debts without having to sell off assets cheaply.
Since the summer's credit crisis SIVs have been in the spotlight after they saw many investments plummet in value.
SIVs sell short-term debt and use the money to buy higher yielding assets.
See full Article.
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