UPDATE 1-Bank of New York restructures cash fund on loss
(Adds fund details, background)
BOSTON, Sept 18 (Reuters) - Bank of New York Mellon Corp (BK.N: Quote, Profile, Research, Stock Buzz), 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 cents.
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.PK(LEH.N: Quote, Profile, Research, Stock Buzz), which filed for bankruptcy on Monday, is giving a huge headache to asset managers and their traditionally safe cash and money market funds.
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'.
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. Continued...
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