Carlyle Group has been forced to shut down an £11bn fund after banks pulled out of a refinancing package.

Its Carlyle Capital hedge fund, which had a large exposure to the US mortgage market is in dire straits only two weeks after the company issued its annual report for 2007 with a clean bill of health from the auditors PricewaterhouseCoopers, The Guardian said.

The company said: 'Carlyle Capital Corporation announced on 12 March that its negotiations with lenders to refinance its portfolio of US government agency AAA-rated residential mortgage-backed securities had ended. Carlyle Capital was unable to reach a deal with lenders to refinance its portfolio on sustainable terms. As a result, it is expected that Carlyle Capital's lenders will take possession of the remaining residential mortgage backed securities assets.'

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