BNY Mellon (BK) Plans to Divest Canada Unit to Computershare
The Bank of New York Mellon Corp. BK has entered into an agreement with Computershare to divest BNY Trust Company of Canada. The deal, expected to be completed in the second quarter of 2024, is still subject to customary and regulatory approvals. Notably, the financial terms of the transaction were not revealed.
The divestiture is in alignment with BNY Mellon’s strategic focus to gain a foothold in foreign markets outside Canada, while for Computershare, the deal fits within its core strategy to enhance the footprint and scale of corporate trust business within North America.
BNY Trust Company of Canada, formed in 2001 and based in Toronto, offers a diverse range of trust and agency services to a broad range of clients, including issuers, corporations, banks and government entities within Canada. It has a portfolio of roughly 1,800 corporate trust mandates.
Per the agreement, all the pertinent staff members are expected to transition to Computershare and will operate from the Toronto office. This will be undertaken by both entities to ensure a smooth transition of business and employees.
Cecile Nagel, Global Head of Corporate Trust of BNY Mellon, said, “Computershare is the right choice for BNY Trust Company of Canada, and we are confident in their ability to ensure our clients continue to receive best-in-class service. In turn, we remain fully focused and committed to our global Corporate Trust franchise outside Canada.”
The company remains optimistic about pursuing strategic acquisitions and divestitures in order to penetrate overseas markets and mitigate costs to enhance profitability. In 2022, it divested BNY Alcentra Group Holdings, while it acquired Optimal Asset Management in 2021.
Over the past six months, shares of BK have rallied 35.4%, underperforming the industry’s growth of 43.4%.
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Currently, BK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Financial Services Firms Taking Similar Steps
Earlier this month, HSBC Holdings PLC HSBC entered into a joint agreement with Grupo Financiero Galicia (“Galicia”) to sell its Argentina business. The transaction is valued at $550 million and aims to shift its focus on the core Asian operations.
HSBC incurred $1 billion as pre-tax loss pertaining to the deal during the first quarter of 2024 due to reclassification as held for sale. Besides, on closing, $4.9 billion will be recognized in the income statement as historical foreign currency translation reserve losses.
In March, The Goldman Sachs Group, Inc. GS completed the sale of GreenSky, its home-improvement lending platform, to a consortium that includes KKR, Bayview Asset Management and CardWorks and is led by investment firm Sixth Street Partners.
GreenSky was acquired by GS in 2022 for $1.7 billion. However, in October 2023, the company announced its intention to dispose of the business in a major business restructuring initiative.
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