Big 3 US banks to set up fund

12 November 2007

The top three banks in the US have agreed to the structure of a fund that is intended to help calm the turmoil in the credit markets.

Bank of America, Citigroup and JPMorgan have agreed to a fund of at least $75 billion that could be operational by December.

Reports from Bloomberg state that an un-named source said a fund had been agreed upon and 60 financial institutions would be consulted.

These institutions will be asked to contribute money to the fund as soon as November 16th or earlier next week, the source explained.

Major credit rating companies will need to approve the plan and banks are still in the process of negotiating a fee structure of between 75 to 100 basis points.

The fund will not require structured-investment vehicles (SIVs) to get approval of 75 per cent of investors if they want to participate.

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