BNY, Northern Trust Rumored To Mull Potential Merger That Could Lead To ‘Monster’ Banking Deal — Retail’s Excited

Big bank Bank of New York Mellon Corp. (BK) reportedly approached smaller peer Chicago, Illinois-based Northern Trust Corp. (NTRS) regarding a potential merger.

A Wall Street Journal report, citing people familiar with the matter, said the CEOs of both banks have held at least one conversation regarding the merger. The two, however, haven’t discussed any specific offer.

BNY was now mulling the next steps such as making a formal offer, the report said, adding if talks fructify, a monster deal is in the offing in the financial services industry. A potential combination would create an “investment management powerhouse,” overseeing  more than $3 trillion in assets.

On Stocktwits, retail sentiment toward Northern Trust was ‘bullish’ (72//100) by late Sunday, improving from ‘neutral’ a week ago.

Retail mood toward BNY stock remained ‘bullish’ (61/100) and the message volume was ‘high.’

Northern Trust's valuation is about $22 billion compared to BNY’s $66 billion. Northern Trust stock is up about 21% year-to-date, underperforming the 21% gain for BNY stock.

BNY stock has benefited from CEO Robin Vance's turnaround plan. In mid-April, the bank reported a profit beat, thanks to a strong increase in assets under custody. 

The Journal noted that the administration under President Donald Trump has been favorably disposed toward big bank deals, a big positive for the rumored deal.

Among BNY’s services are custodial services, record-keeping for pension funds and other institutional investors, managing cash and debt servicing of companies, and settling trades backed by the U.S. government debt. It also has a thriving asset and wealth management business.

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