Magazine article American Banker

Bank of N.Y. Buying Corporate Trust Business from NationsBank Corp

Magazine article American Banker

Bank of N.Y. Buying Corporate Trust Business from NationsBank Corp

Article excerpt

Hard on the heels of two major acquisitions in the securities processing and global custody business, Bank of New York Co. said Thursday it agreed to purchase the corporate trust business of NationsBank Corp. for an undisclosed sum.

The business includes approximately 11,500 bond trustee and agency accounts representing more than $167 billion in outstanding securities. Those accounts include a variety of trust and agency appointments for issuers of municipal, corporate, and asset-backed debt instruments.

Analysts guessed that Bank of New York paid between $80 million and $120 million - two to three times the $40 million in estimated revenues NationsBank gets from the business.

Observers said Bank of New York will be able to squeeze a 50% gross margin out of the business - much more than NationsBank did.

"All of these processing businesses are driven by volume. You've got to have the volume in order to justify the investment," said Lawrence Cohn, a banking analyst with PaineWebber Inc. "In NationsBank's case they didn't have either (the volume or the investments), so they sold out."

Analysts said the final price Bank of New York pays will depend on how many accounts it retains.

"This business is still somewhat fragmented, even if the number of corporate trust providers has declined as a result of consolidation and mergers between banks," said James H. McKenzie, consulting director in charge of mergers and acquisitions at the Spectrem Group.

Corporate trust covers broad operations that provide fiduciary and financial services to corporations and other large debt issuers. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.