JPMorgan Chase & Co., the biggest U.S. bank, closed five ofits European money-market funds to new investments after theEuropean Central Bank lowered deposit rates to zero.

JPMorgan notified clients yesterday that it won't accept newinvestors or money in five euro-denominated money-market andliquidity funds because the rate cut might generate negativereturns for investors, the New York-based company said in a noticeto shareholders.

The ECB yesterday reduced its benchmark rate to a record low of0.75 percent and took its deposit rate to zero, with PresidentMario Draghi saying the cuts may have only a “muted” economicimpact.

The deposit rate cut “will almost certainly move cash bids inshort-dated instruments into negative territory, and so we havetaken the step to restrict subscriptions and switches into thefunds in order to protect existing shareholders from yielddilution,” the company said on its website.

The restrictions are temporary, said Kristen Chambers, aspokeswoman for JPMorgan's asset-management division, which managesthe funds. It will still process redemptions or transfers out ofthe funds and will periodically review whether to accept new money,the company said.

The funds affected are JPMorgan's Euro Liquidity Fund, EuroGovernment Liquidity Fund, Euro Money Market Fund, Euro LiquidMarket Fund and JPMorgan Series II Funds — EUR.

No other global liquidity funds are at risk of being closed,“but we will not hesitate to restrict investments if we feel themarket environment warrants such action in order to protect theinterests of existing shareholders,” JPMorgan said on itswebsite.

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