Acquisition Indicates BNY Mellon's Focus on Expansion

By Trefis Team,

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BNY Mellon ( BK ), the largest custodian of assets in the world, recently agreed to buy Talon Asset Management's wealth management operations. The deal adds $800 million in assets to BNY Mellon's private client assets and provides better access to clients in the Chicago area. BNY Mellon competes with top asset managers like State Street ( STT ), BlackRock ( BLK ), Deutsche Bank ( DB ) and JPMorgan Chase ( JPM ) among others.

We currently have a $35.76 price estimate for BNY Mellon's stock , with the asset & wealth management division contributing 26% of this value.

The acquisition of Talon's wealth management business, while notable, adds little upside to BNY Mellon's stock value due to the relatively small incremental effect of Talon's assets on BNY Mellon's existing base of assets under management (AuM).

BNY Mellon's Asset Under Management

The above chart represents the combined AuM of BNY Mellon's asset management and wealth management businesses.

BNY Mellon's AuM hit $1,121 billion in 2007 after the merger of Bank of New York Company and Mellon Financial Corporation. AuM dropped to $928 billion in 2008 before recovering to $1,172 billion in 2010.

As illustrated in the interactive chart above, an $800 million increase in AuM in 2011 is insignificant compared to BNY Mellon's large asset base, adding minimal upside to the firm's stock value.

However, the acquisition is important as it indicates BNY Mellon's focus on expansion, both domestically and abroad, which could spark further AuM growth going forward.

See our analysis of the outlook for BNY Mellon's AuM

Check out our full analysis for BNY Mellon's stock here

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets
Referenced Stocks: BK , BLK , DB , JPM , STT

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