Bank of New York Mellon's business swap for JP Morgan Chase's global corporate trust business in Japan is finally complete, three years after the deal was first inked.
With this month's completion of the transaction, BNY Mellon will offer asset securitisation services in Japan. The bank already offers asset management and securities servicing, including asset trustee, cash management and fiscal agency services, to institutional and retail customers in the country.
"Scale, expertise, innovation, flexibility are all important differentiators, as is the ability to tailor solutions to meet the broad spectrum of unique and complex operational challenges [corporate trust] issuers face today," says Gary Lew, BNY Mellon Asia-Pacific head of global corporate trust. "We know that issuers need a committed corporate trust partner with a wealth of experience and wide range of expertise to meet their unique debt financing service requirements. We deliver on all counts."
The final acquisition of JP Morgan's Japanese trust bank shares completes a long business swap process between the two banks. In 2006, BNY Mellon agreed to swap its retail banking and regional middle-market businesses for JP Morgan Chase's global corporate trust business.
Under the deal BNY Mellon initially expanded its corporate trust client base to $8 trillion in total debt in 20 countries. In Asia, the bank acquired corporate trust offices in Hong Kong, the Philippines, South Korea and Taiwan in addition to Japan.
According to Lew, the acquisition of JP Morgan trust bank's Japan shares is the final piece of the deal and the integration of the two businesses is complete.
JP Morgan's acquisition of BNY Mellon's retail banking and middle-market businesses gave it 338 branches in the New York-New Jersey-Connecticut "tri-state" area that in 2006 had $14.5 billion in deposits and $15.4 billion in assets.
Corporate trust expansion is not BNY Mellon's only plan for Japan. "Japan is one of the most advanced markets in the world and this is an exciting opportunity for our company to accelerate the already significant growth of our corporate trust business in Asia-Pacific, whilst simultaneously deepening our service range available to Japanese institutions," says Scott Posner, BNY Mellon CEO of global corporate trust.
BNY Mellon cites growth plans for securities servicing and asset management in Japan in addition to its corporate trust acquisition.
In 2008, revenue in the bank's issuer services division -- including corporate trust -- grew 8% to $1.69 billion. The bank cites an increase in non-US corporate trust revenue and market share gains as contributing to this rise.
For the year, the bank's net income applicable to common stock was down 32% year-on-year to $1.39 billion, or $1.45 billion without one-time fees.
The bank's corporate trust business services $11 trillion in outstanding debt. BNY Mellon's debt coverage includes corporate and municipal, mortgage-backed and asset-backed securities, collateralised debt obligations, derivative securities and international debt offerings.