The head of one of Barclays Capital’s key debt groups has resigned in the same week that several investment vehicles he structured were hit by losses in the credit market turmoil.

Edward Cahill, the head of the bank’s European collateralised debt obligations (CDO) group, resigned on Monday after returning from holiday.

Mr Cahill had been with BarCap, which is the investment banking arm of Barclays, the high street bank, since 2004. He previously worked for JPMorgan. BarCap’s CDO group was responsible for the development of at least four highly leveraged structured investment vehicles, known as SIV-lites, that are thought to have run into trouble in recent days because they invested in US sub-prime mortgages.

A source said that Cairn Capital, a London fund manager, was working with BarCap on the restructuring of Cairn High Grade Funding I, a $1.8 billion (£900 million) SIV-lite. Cairn is understood to be talking to investors about lengthening the terms of the commercial paper backing the fund.

Mainsail II, a $2 billion fund structured by BarCap and run by Solent Capital, the hedge fund manager, said on Monday that it had begun selling assets after being unable to raise money in the asset-backed commercial paper markets. Another BarCap creation, Golden Key, a $1.9 billion fund run by Avendis, the Swiss fund manager, has had similar difficulties.

BarCap structured Sachsen Funding I, a $7 billion SIV-lite connected to Sachsen LB, the German bank, that needed a €17 billion (£11.5 billion) bail-out by other banks last week after its conduit, Ormond Quay, could not raise money in the commercial paper market. Stefan Leusder, Sachsen’s head of capital markets, resigned yesterday.

SIV-lites are similar to conduits – packages of commercial and retail loans used by banks and fund managers as collateral to raise short-term debt – but are often leveraged by between 40 to 70 times. Standard SIVs are typically leveraged 12 to 16 times. Mr Cahill was instrumental in developing the SIV-lite structure. His group is thought to have created as many as 15 of the vehicles.

BarCap’s SIV-lites have a “liquidity backstop” that allows them to ask the bank to fund up to 25 per cent of the value of the commercial paper it issues if the market turns sour. Investors are thought to be concerned about Barclays’ exposure to the failure of SIV-lites.

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