The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Structured investment vehicles: Why European banks are shunning Mlec

Citi, Bank of America and JPMorgan will fail to persuade several banks to participate in the initial idea of a master-liquidity enhancement conduit.

The US banks – which are the biggest sponsors of the structured investment vehicles that Mlec is designed to help – have reportedly agreed a simplified structure for the conduit. Mlec has the sponsorship of the US Treasury but it does not have the backing of many European institutions which, rightly or wrongly, feel that the plan does not serve the best interests of them or their clients.

HSBC and Standard Chartered are among those who have turned their backs on the scheme; they are pursuing other techniques to solve the liquidity crisis afflicting the asset-backed commercial paper market. And the involvement of other large European sponsors is viewed as unlikely too, so Dresdner Bank and Rabobank are not thought likely participants either. In fact it is US institutions, under pressure from the US Treasury, that will support Mlec.

Although Mlec was mooted as a scheme that could alleviate the much-feared fire sale of decent assets, it was widely criticized on a number of grounds. First, it was deemed expensive. To use the facility – widely touted at $80 billion – investors would have to pay a 100 basis point fee. Also it is seen as detrimental to capital note investors in SIVs as it would only serve senior investors.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree