Bloomberg News reports that shares of the custody bank jumped yesterday to their highest price since the financial crisis after Peltz’s Trian Fund Management LP revealed a 2.5% stake and said it’s seeking talks with management and the board.
The activist investor is stepping in after the $43bn company’s margins and valuation trailed that of competitors State Street and Northern Trust for the past couple of years, according to data compiled by Bloomberg.
While BNY Mellon has already taken some steps to improve profitability, Trian could push it to be even more aggressive with cost cuts and to better consolidate its technology platforms and operations, said Sandler O’Neill & Partners LP. With $89bn of cash, the company may be able to boost returns if it began lending like a traditional bank, according to Rafferty Capital Markets LLC. Selling off pieces of the business might be another avenue for creating value for shareholders, Credit Suisse said.
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