Bank Of New York Deal Could Spur More Mergers
As we've reported --there’s been yet more consolidation in the banking sector. The big deal today of course involves Bank Of New York buying Mellon Financial in an all stock deal worth $16.5 billion. The acquisition creates the world's largest securities servicing and asset management company with more than $1.3 trillion under management.
According to Thomson Financial--this is the second largest U.S. financial deal this year and the 12th largest bank deal ever in the U.S.
On CNBC’s "Closing Bell" Maria Bartiromo talked about the merger with Cassandra Toroian. She is President and CEO at Blue Rockefeller. And Maria also talked with Thomas McCrohan who is Senior Analyst of Financial Technology and Processing Banks at Janney Montgomery Scott.
This deal begs the question--should investors expect more banking consolidation in the weeks ahead?
Cassandra Toroian says yes--as this pushes other trust companies to do a deal. She says this is a scale business, and in order to stay competitive (with the pricing that this new combination generates) other financials might have to do the same thing, themselves.
The attractiveness of this sector is that it's a very "sticky" business. That means it provides an annuity stream - you can sell the same customer many different products.
Thomas McCrohan agrees, although he reminds there are smaller competitors--like Northern Trust who argue you can do this business without scale. McCrohan thinks it's going to become increasingly difficult to remain smaller and not sell out.