LONDON (Reuters) - Asia-focused bank Standard Chartered has withdrawn two proposals to rescue a $7 billion structured investment vehicle (SIV) just a week after it was forced into receivership, the bank said on Wednesday.
But receiver Deloitte said that it was still seeking other solutions for the Whistlejacket vehicle, including talks with other banks. It said a fire-sale of the SIV's assets, which are regarded as holding long-term value, was not an option.
Standard Chartered said the withdrawal of the proposals -- one of which would have seen the bank take all of Whistlejacket's assets onto its balance sheet -- was the result of a number of factors.
Those included "the pace of continuing deterioration in the market for certain asset classes and the impracticality of completing any proposal within the confines of the receivership as it has evolved," Standard Chartered said in a statement.
Credit markets have seen spreads widen sharply across all asset classes so far this year, with asset-backed securities and bank debt -- the main instruments SIVs invest in -- hit particularly hard.
Neville Kahn, the partner in charge of the receivership at Deloitte, said it would be exploring all the options available.
"That includes alternative financing, whole book solutions or holding these assets to long-term maturity," Kahn said. "But I can confirm that there is no need for a fire sale of the assets. Absolutely categorically no need," he said.
Deloitte declined to name the banks that it was talking to.
"We're trying to work through this as quickly as we can but there is no timescale," said Kahn.
SIVs raise short-term debt and invest the proceeds in longer-term securities, mainly bank debt and asset-backed securities. They have faced problems as the subprime crisis has led funding to dry up at the same time as the value of their assets has dropped sharply.
Deloitte is also acting as receiver for the Cheyne Finance SIV, set up by hedge fund Cheyne Capital Management, and the Rhinebridge Plc SIV set up by German bank IKB.
(Reporting by Clara Ferreira-Marques and Natalie Harrison; Editing by Greg Mahlich)