Bank of New York Mellon Corp (BK:US). and Northern Trust Corp. (NTRS:US) have joined asset managers limiting deposits to euro-denominated money market funds after the European Central Bank lowered deposit rates to zero.
BNY Mellon’s move to restrict subscriptions in the 2.28 billion euro ($2.79 billion) BNY Mellon Euro Liquidity was effective July 9, Patrice Kozlowski, a spokeswoman for the New York-based bank, said today in a telephone interview. Northern Trust closed the 2.14 billion euro Euro Fund to new investments, John O’Connell, a spokesman for the Chicago-based company, said in a telephone interview.
“We determined the action was in the best interest of shareholders to reduce the impact of materially lower yields on returns,” O’Connell said.
Money funds have been struggling to invest client assets at a profit as interest rates globally are near record lows and Europe’s sovereign-debt crisis has reduced the supply of debt viewed by the funds as safe. Managers have been forced to cut fees to keep customer returns above zero, and some have abandoned the business.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and BlackRock Inc. (BLK:US) each took similar steps with euro-denominated money funds July 6, a day after the ECB reduced its benchmark interest rate to a record low of 0.75 percent and took its deposit rate to zero.
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