Northern Trust Corp. expects to incur a pretax charge of $525 million in the third quarter, in part because of its moves to bolster its money-market funds, the firm announced today.
Combined, the firm will incur $328 million in after-tax charges.
In a news release, Northern Trust said it will increase its capital support level to its cash vehicles by $321 million to a maximum contribution of $550 million. This will allow the funds to maintain a net asset value of $1, meaning the fund does not fall below $1 for every dollar invested, also known as breaking the buck. This will result in a pretax charge of $290 million.
Officials at Northern Trust will also take a $150 million charge as part of certain actions to provide support for securities lending clients whose cash collateral is invested in five constant-dollar commingled investment pools negatively impacted by recent market events, according to a news release. Officials did not name the five investment pools.
The firm will also put a program in place to buy certain illiquid auction-rate securities resulting in a pretax charge of $85 million.
Our actions demonstrate the depths of our commitments to our clients and were not required by contracts or regulation, said Frederick H. Waddell, president and CEO, in a video message posted on the firms website.
Spokesman Douglas Holt could not provide additional information before press time.