A couple of years ago, when structured investment vehicles were sowing devastation in the financial world, I frantically searched for a way to explain to non-financiers how these entities worked. The analogy I resorted to was a garage or cellar.
For just as a garage or cellar is usually attached to a house – but not truly inside a house – entities such as SIVs and conduits have traditionally had a semi-detached status with banks. That served the banks dangerously well in the years of the credit boom, since they used SIVs as a place to store irritating stuff which they did not want cluttering up their balance sheet – such as a household stuffing rubbish into a cellar, so that it does not mess up the smart front room.
These days, of course, the word “SIV” has become almost as taboo as the phrase “subprime securitisation”. Yet, as I perused this week's announcement that Barclays plans to sell $12.3bn of credit assets to a “newly established fund” called Protium Finance – which will be independent but mostly financed by a loan from Barclays – it was hard to escape a twinge of déjà vu.