| June 30
June 30 Activist investor Nelson Peltz has built
up a $1 billion stake in BNY Mellon Corp in what could
lead to a shakeup over lagging stock performance and rising
operating expenses at the world's largest custody bank.
Shares of BNY rose more than 2 percent.
Peltz's Trian Fund Management LP "has recently contacted the
Bank of New York Mellon to express its interest in discussing
Trian's ideas and initiatives to drive long-term growth and
enhance shareholder value with the company's management and its
board," according to a person familiar with Trian's thinking.
Funds managed by Trian collectively own about 28.9 million
shares, or about 2 percent, of BNY Mellon after adding to the
stake in the first quarter, according to disclosures with the
U.S. Securities and Exchange Commission and the person familiar
with Trian's investment strategy.
"Trian is a respected investment firm," BNY Mellon spokesman
Kevin Heine said. "We are looking forward to engaging with them,
as we do all our investors." He declined to comment further.
BNY Mellon's shares were up 2.2 percent at $37.03 in midday
trading on the New York Stock Exchange. But the stock has
severely lagged the broader market's recovery over the past five
Trian is known for pressing for change at companies in
which it invests. In October 2011, for example, Trian issued a
top-to-bottom critique of BNY Mellon's top rival, State Street
Corp, which it said had paid too much for acquisitions
and sacrificed profits for revenue growth while allowing
compensation expenses to balloon.
Trian also pushed State Street to consider separating the
asset management and custody bank divisions. State Street kept
its division intact, but did lower compensation costs.
Some analysts have criticized BNY Mellon for allowing its
compensation costs to creep upward and have recommended that the
bank spin off its asset management division.
CLSA Securities analyst Mike Mayo, for example, said in a
February report that BNY had the worst pre-tax profit margin of
its peer group and that the asset management arm would be more
valuable if it were spun off from the custody bank.
BNY Mellon executives have been steadfast in keeping the
asset management arm tied to the company's custody business. For
example, at a May investment conference, Chief Executive Officer
Gerald Hassell said asset management was complementary to
investment services because its index and money market offerings
were "extremely attractive to our servicing clients."
Over the past 12 months, BNY Mellon shares have rallied,
rising 33 percent and beating the 22 percent advance of the
Standard & Poor's 500 index. But over the past five
years, the S&P 500 is up 113 percent, while BNY is up only 27
(Additional reporting by Svea Herbst; Editing by Lisa Von Ahn)