Editor’s note: Before its merger with Mellon Financial, the Bank of New York pulled off a complex asset swap with J.P. Morgan Chase. To read CFO.com’s exclusive interview with Bruce Van Saun about that deal, click here.
From a deals standpoint, last year could not have been any busier for Bruce Van Saun. For starters, there was the Bank of New York Co.’s acquisition of Urdang Capital Management, a real estate investment manager. Then, the 49-year-old vice chairman and CFO oversaw an asset swap with JP Morgan Chase, a complicated deal that exchanged BNY’s 338 retail branches for JP Morgan Chase’s global corporate trust business. Next, Van Saun helped the bank and two other firms form a new trade execution and order management company, BNY ConvergeEx Group. Finally, in December came news of the crowning deal: a blockbuster $16.5 billion merger with onetime rival Mellon Financial Corp., which will create the world’s largest securities servicing and asset management firm, Bank of New York Mellon Corp. Van Saun, who will be CFO of the new bank, sees blue skies ahead for the business — and plenty of work to keep him busy in 2007.
How did the Mellon deal come about?
Mellon was rumored to be interested in acquiring MFS, a mutual fund company in Boston. That gave rise to the notion that Tom Renyi, our CEO, should put a call in to Bob Kelly, the CEO at Mellon — to say that before you get too wedded to the MFS opportunity, let’s talk about doing something that’s truly transformational.
It was always our view that consolidation in our space, the trust and custody banking segment, was inevitable. It’s good to be the first mover and try to lead that effort, as opposed to being a follower.
Tom Renyi had tried to buy Mellon before.
Yes, we made a couple of attempts back in the 1990s. There was a different management team at Mellon [at that time]. In the years since, both the Bank of New York and Mellon had done a great deal to transform their business mixes, in terms of divestitures and acquisitions. So the merger made a lot of sense at a strategic level.
From start to finish, from when Tom made the initial call to when we announced the transaction, was about eight weeks.
This big merger, which is scheduled to close in July, seems much simpler than the asset swap with JP Morgan Chase.
You’re right. It wasn’t nearly as complex from a financial standpoint. We spent the better part of a year on the asset swap. That transaction was more complicated because it involved businesses that were embedded inside our respective organizations. These were not stand-alone entities. There were significant balance-sheet implications for both companies, as we examined how to take one business out and put another one back in. The modeling, the transition services arrangements between the two companies, and various operational issues were very difficult to analyze and then negotiate.