BNY Mellon Acquires Part Of CIBC

In an effort to increase its share in the corporate trust market in Canada and expand its leadership position in a number of key segments, BNY Mellon, the corporate brand of The Bank of New York Mellon Corporation (BK: 27.71 -0.02 -0.07%), said on Tuesday that it has agreed to acquire the corporate trust business of CIBC Mellon.
 
Subject to regulatory approvals, the deal is expected to close by the end of this quarter. On completion, the deal will also allow BNY Mellon to service domestic and cross-border debt issuances, structured credit and securitizations, government stimulus programs and public private partnership transactions.
 
BNY Mellon Corporate Trust services $12 trillion in outstanding debt from 58 locations in 20 countries. Its clients include governments and their agencies, multinational corporations, financial institutions and other entities that access the global debt capital markets.
 
The CIBC acquisition will enable BNY Mellon to service approximately $300 billion in outstanding debt with offices in Vancouver, Calgary, Toronto and Montreal through its wholly-owned subsidiary BNY Trust Company of Canada. Concurrently, CIBC Mellon will be able to further focus on providing market leading products and services across its core client base.
 
There were no estimate revisions in either direction over the last 7 days. Over the last 30 days, six of the 15 analysts covering the stock lowered estimates for the first quarter of 2010, while only one upward revision was witnessed. Currently, the Zacks Consensus Estimate for first quarter is 54 cents per share, which would be up by 1.1% over the year-ago quarter.
 
The lower number of upward estimate revisions for the first quarter indicates a likelihood of downward pressure on the performance of the stock in the near term.
 
With respect to earnings surprises, the stock has not been steady over the last four quarters, with two positive and two negative surprises. However, the average remained positive at 3.4%. This implies that BNY Mellon Corporation has surpassed the Zacks Consensus Estimate by 3.4% over that period.
 
Currently, there is no upside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, as the company is expected to report in-line with the most accurate estimate.
 
The BNY Mellon Corporation was incorporated on July 1, 2007, following the merger of The Bank of New York Company, Inc. and Mellon Financial Corporation. The New York-based financial services company provides various products and services to individuals and institutions in more than 100 markets worldwide.
 
The BNY Mellon Corporation’s fourth-quarter earnings of 59 cents per share came in above the Zacks Consensus Estimate of 52 cents. The company experienced an increase in assets under custody and administration during the quarter.
 
Though BNY Mellon Corporation is well positioned to benefit from the growth of global financial assets, supported by expense management, the modernization of public pension schemes and growth in cross-border investing, we expect interest-bearing deposit costs to rise faster than asset yields due to competition, thereby negatively impacting net interest margin as well as net interest income.