Pershing CEO Sees Boon in Business as Bear Unravels
Pershing, the largest financial clearing company, is winning a "material" amount of new business as investors look for a safe haven amid the market turmoil that caused the collapse of Bear Stearns, its chief executive told Reuters.
"There's obviously disruption in the marketplace and that's been a big advantage for Pershing," Richard Brueckner, who heads the unit of Bank of New York Mellon , told Reuters in a telephone interview.
"We're working with an increasing number of prospective customers to put them on our platform, and we're working hard to do it expediently," he said. "They have a sense of urgency as a result of the market disruption."
"The market disruption's caused by a much broader liquidity crisis. Bear Stearns is a casualty of that -- sadly," Brueckner said.
The amount of new business is "material," he said, adding that "the results will become self-evident."
Fidelity's National Financial Services, the No. 2 financial clearing company, is also benefiting from the turmoil and is fielding calls from Bear clients.
"We've seen a significant increase in interest in the past weeks from broker dealers that are currently clearing through Bear Stearns," said Steve Austin, a spokesman for Fidelity.
Pershing and National Financial provide clearing and other services for broker dealers, banks, and other clients. They compete with Bear's global clearing services business.
An exodus of Bear's clearing customers would be bad news for JPMorgan Chase , which agreed to buy Bear and views the clearing business as one of the investment bank's most attractive assets.
Bear , recently ranked as the fifth-largest investment bank, collapsed as large subprime mortgage losses and falling confidence in the company prompted a run on the bank. The Bear deal is set to cost JPMorgan roughly $9 billion in stock, transaction-related costs, and potential losses from Bear's portfolio.
Pershing's Brueckner said: "Over the last month or so calls into us have escalated as opposed to the calls we're making. So there's been this greater sense of urgency over the last month or so."
"The bulk of the activity is (with institutional broker dealers and prime brokerage customers)," he said.
Bank of New York Mellon's clearing and execution services fees rose 21 percent to $314 million in the fourth quarter and accounted for about 8 percent of the bank's total revenue.
"Fortunately, we're in a very solid position here at Pershing, so we're viewed as a bit of a safe haven in the storm," Brueckner said.