Magazine article American Banker

1Q RESULTS: With Profits Up, BNY Mellon and State Street Eye Deals

Magazine article American Banker

1Q RESULTS: With Profits Up, BNY Mellon and State Street Eye Deals

Article excerpt

Byline: Matt Ackermann

The country's two largest custody banks said they will keep looking for acquisitions, of whatever size, as they wait for higher interest rates to spur organic growth.

At Bank of New York Mellon Corp., which is coming off two major deals in the past four months, the chief financial officer, Todd Gibbons, said he doesn't see any other major deals on the horizon for the large custody banks. BNY Mellon would consider "geographic or product capability fill-ins," he said in an interview Tuesday.

Robert Kelly, BNY Mellon's chairman and chief executive officer, said during the company's quarterly earnings conference call on Tuesday that it plans to raise $700 million in equity that would be used to "fund purchases and give us additional capital."

Kelly added, "I would think we are more or less done for the year except perhaps something small outside of the U.S."

BNY Mellon announced buyout deals in February - for PNC's Global Investment Servicing in February - and in March, for the BHF Asset Servicing GmbH unit ofBHF-Bank Aktiengesellschaft.After closing the transactions, BNY Mellon would become the second-largest asset servicer in Germany.

State Street Corp., meanwhile, is looking to acquire opportunistically and anticipates plenty of smaller acquisitions for trust banks in general.

From a potential target's standpoint, "unless you are at a certain scale, it is hard to drive growth and reinvest in the business," Joseph L. Hooley, State Street's CEO, said in an interview Tuesday. "Scale is going to be increasingly important. I think subscale providers will decide over time to consolidate."

Hooley, who became CEO on March 1 after Ronald E. Logue retired, said State Street plans to continue targeting "high-growth" segments, including alternative asset management, and deals outside of the United States. …

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