The Bank of New York Mellon has announced that as a result of recent market events, it will provide support to its clients, who have invested in money market mutual funds, cash sweep funds and similar collective funds impacted by the bankruptcy of Lehman Brothers.
In action to be taken on behalf of its clients, the company will be issuing support agreements related to five commingled cash funds used primarily for overnight custody cash sweeps and one fund used for the reinvestment of cash collateral within the company’s securities lending business. In addition, the company has issued support agreements for four Dreyfus money market mutual funds that were disclosed on September 17, 2008. The support agreements are designed to enable these funds with Lehman holdings to continue to operate at a stable share price of $1.
The company expects to incur an after-tax charge of approximately $425 million in the third quarter. This charge includes additional costs associated with previously disclosed capital support agreements that were outstanding at the end of the second quarter.
Support is being provided to investors in DF Temporary Investment Fund, EB SMAM Short Term Investment Fund, EB Temporary Investment Fund, EB Daily Liquidity Money Market Fund and The Pooled Employee Daily Liquidity Fund, all of which are commingled cash funds used primarily for overnight custody cash sweeps.
Robert Kelly, chairman and CEO of The Bank of New York Mellon, said: These actions will provide support to our clients and, given our size and industry leadership, will hopefully contribute to greater stability in the overall market.