Barclays yesterday threw a $1.4 billion (€1 billion) lifeline to a sophisticated debt vehicle the bank helped set up with Cairn Capital, the London-based hedge fund, and is considering similar moves for other vehicles.

The restructuring of Cairn High Grade Funding, a so-called SIV-lite (structured investment vehicle), caps a tumultuous two weeks in which the British bank came under scrutiny over its financial position and exposure to potential losses. SIVs are investments designed to profit from the difference between short-term borrowing rates and longer-term returns from structured product investments.

Shares in Barclays rose almost 3 per cent as investors shrugged off news that the bank borrowed almost £1.6 billion from the Bank of England's emergency facility on Wednesday night after a glitch disrupted money markets.

The bank did not confirm the overnight loan but issued a statement reassuring investors it is "flush with liquidity".

Executives and advisers contacted major shareholders in an attempt to ease any concerns about the bank's finances.

"In times like these, when there is an absence of information, people jump all over whatever there is to try and draw conclusions," analyst Simon Maughan at MF Global said.

"The Bank of England's liquidity window is ignored 95 per cent of the time. I don't think it is right to jump up and down and make a big thing about it right now."

Use of the Bank of England's emergency facility, which has already been tapped 14 times since the start of 2007, does not necessarily mean an institution is in trouble - but analysts said the furore was indicative of market jitters, with any further loans unlikely to pass unnoticed.

The restructuring of Cairn's SIV-lite comes after Barclays and the hedge fund pored over the assets of the vehicle, which was facing difficulties after it was unable to borrow in the short-term commercial paper markets.

SIV-lites use commercial paper to fund longer-dated, senior debt. They are under pressure because of falling values in their investments and a liquidity crunch. Barclays, Cairn, and other investors in the vehicle have agreed to replace its $1.4 billion of commercial paper with a long-term credit facility.

Sources said the restructuring could act as a template for other such moves. But it is unclear whether other SIV-lites created by Barclays could be rescued in the same way.