(Adds fund details, background)
BOSTON, Sept 18 Bank of New York Mellon Corp
(BK.N), a U.S. asset manager and custody bank, said on Thursday
it has restructured an institutional cash fund to minimize
losses to clients from holdings of Lehman Brothers assets.
The $22 billion BNY Mellon Institutional Cash Reserve Fund
had seen losses from its holdings of Lehman, causing its net
asset value to fall below the $1 a share par value to 99.1
Bank of New York Mellon said in a statement the fund, which
has characteristics similar to a money market fund, has
isolated the Lehman assets within the fund in a separate
structure. It said the Lehman assets accounted for 1.13 percent
of the fund.
Lehman Brothers Holdings Inc LEHMKQ.PKLEH.N, which
filed for bankruptcy on Monday, is giving a huge headache to
asset managers and their traditionally safe cash and money
On Tuesday, the New York-based Reserve Primary Fund, one of
the oldest and biggest money-market funds, said its shares fell
below the $1 a share threshold due to losses on Lehman debt. It
was the first time since 1994 that a money market fund had
dropped below the critical $1 a share level.
Some institutions have had to shore up their money-market
funds to prevent their shares from falling below the $1 level
-- commonly known as 'breaking the buck'.
Evergreen Investments said on Wednesday its parent Wachovia
Corp WB.N will 'support' three Evergreen money market funds
to prevent their shares from falling.
Many asset managers have come out with statements to
reassure investors their cash is safe in the money-market
funds. But many investors have rushed to the exits.
Boston-based Putnam Investments, a unit of Canada's
Great-West Lifeco (GWO.TO), said on Thursday it shut a $12.3
billion money market fund as it faced "significant redemption
pressure" on Sept. 17.
Bank of New York Mellon shares slumped as much as 35
percent intra-day but then rallied to close down just 2.6
percent at $32.25 on the New York Stock Exchange.
(Reporting by Muralikumar Anantharaman, editing by Leslie