Bank of New York buying Mellon

[themaguffin]

Bank of New York buying Mellon
Monday, December 04, 2006

Pittsburgh Post-Gazette

In a blockbuster announcement that could end a storied institution's ties to Pittsburgh, Mellon Financial Corp. and the Bank of New York this morning announced a definitive agreement for the New York bank to buy Mellon for about $16.5 billion.

The move, if approved by regulators and shareholders at both institutions, would create a money management powerhouse. The Bank of New York Mellon Corp., with more than $16.6 trillions in assets under its purview, including $1.1 trillion that it would manage for investors.

"The merger creates an extraordinarily strong and rapidly growing global competitor in our core business,'' Mellon Chief Executive Officer Robert P. Kelly said in a statement accompanying the early-morning merger announcement.

It also would bring together two institutions that, while in the minds of analysts a good strategic fit, were caught in a nasty dispute less than a decade ago, when Bank of New York Thomas A. Renyi sought to buy Mellon for $23 billion and was abruptly spurned.

This time, it appears, Mr. Renyi was more successful in dealing with Mr. Kelly, a former Wachovia Corp. top executive who has been at the helm of Mellon less than a year and recently concluded a strategic review of operations that observers felt was unremarkable in its conclusions.

Mr. Kelly and Mellon vowed that, while the city could be losing on paper one of its landmark institutions that is synonymous with Pittsburgh, Mellon will continue to be highly involved in the region and could even see employment grow by several thousand over time as a result of the merger. It now employs about 6,100 in southwestern Pennsylvania.

"Pittsburgh will continue to be home to several key business units, which will become even larger in the combined organization,'' Mr. Kelly said, adding that he envisions Pittsburgh being "a center of excellence for technology, operations and administration. Our goal is to create 1,000 to 2,000 new jobs in Pittsburgh as a result of this transaction, and continue to add jobs here as the combined company grows.''
But the companies also said in announcing the deal that they expect it will result in the elimination of about 3,900 jobs, or nearly 10 percent of their combined work force.

They said the job cuts from a combined work force of about 40,000 would occur in the three years after the deal closes. They said reductions would be made through normal attrition "wherever possible."

The companies expect to cut costs by about $700 million a year and said the deal will result in restructuring charges of about $1.3 billion.

The companies expect the deal will be completed in the third quarter of next year.

Bank of New York's shareholders will receive 0.9434 shares in the new company for each share of Bank of New York that they own, and Mellon shareholders will receive one share in the new company for each Mellon share they own.

That means Bank of New York shareholders would get about 63 percent of the shares in the new company.

Mr. Renyi will serve as executive chairman of Bank of New York Mellon for 18 months following the close of the deal with overall responsibility for the integration of the two companies.

Mr. Kelly will serve as chief executive of the new company and will succeed Mr. Renyi as chairman of the board. Gerald L. Hassell, currently president of Bank of New York, will hold the same position in the new company.

The board of directors will have 10 members designated by Bank of New York and eight members designated by Mellon. The new company's headquarters will be based in New York City.

Sounds like they are all over the place on the impact of jobs, in Pittsburgh or anywhere for that matter.

[Evergrey]

There goes another Fortune 500.

[donybrx]

Unfortunate....smellin'.......more banking PacMan.... bye Mellon......

And Bank of New York. I hate Bank of New York.

[Evergrey]

didn't Mellon mention a few weeks ago that they were going to consolidate more jobs in Pittsburgh due to its lower costs relative to New York?

[Grego43]

Originally Posted by Evergrey

didn't Mellon mention a few weeks ago that they were going to consolidate more jobs in Pittsburgh due to its lower costs relative to New York?

...they sure did. CEO Robert Kelly is quoted in today's Post-Gazette saying that the merger talks started "about two months ago".

Just to be clear...as long as US corporations have their first responsibility to the the shareholders and not necessary the business-at-large, mergers and aquisitions such as this will continue. It also doesn't hurt that those in the corporate suites stand to make millions from shuffling paper and cutting a few thousand jobs.

This has been a long time coming...and look for more to follow. US Steel...

[Wheelingman04]

This really sucks. Are they going to change the name of Mellon Arena?

[Flash]

^Among other things, I wondered that too. And what about the various things Mellon sponsors around town. And the rooftop signage atop One Mellon Center. Would we see the return of the lit setbacks on the "Dravo Building"

[Evergrey]

http://www.post-gazette.com/pg/06338/743453-100.stm

Mellon CEO said he fought to keep HQ in Pittsburgh
Monday, December 04, 2006

By Dan Fitzpatrick, Pittsburgh Post-Gazette

Mellon Financial Corp. Chief Executive Officer Robert Kelly said in a short phone interview following today's Bank of New York merger announcement that he "absolutely" argued to keep Mellon's corporate headquarters in Pittsburgh but that New York was the more logical location, in the end.

"When you get down to the practical realities of the global financial marketplace, New York City is the financial capital of the planet and it is difficult to argue with that," he said.

While there will be "cost savings" extracted from Pittsburgh as a result of the merger, "the impact on Pittsburgh will be relatively small on a comparison basis," he said, emphasizing again that 1,000-2,000 jobs could be created here over the next three to five years.

"The Pittsburgh story is enormously compelling," he said.

The Mellon-Bank of New York merger talks began about two months ago, when Mr. Kelly took a call from Bank of New York Chief Executive Officer Thomas Renyi while in London on business. Mr. Renyi, according to Mr. Kelly, asked, "Would you consider a merger with Bank of New York?" Mr. Kelly took the question back to his senior management team.

"We were intrigued, I guess would be the way to say it," he said.

As the talks got more serious, "we recognized that . . . Pittsburgh was going to be an issue. We worked really hard on that."



--------------------------------------------------------------------------------

More details in tomorrow's Pittsburgh Post-Gazette.

[donybrx]

Originally Posted by Wheelingman04

This really sucks. Are they going to change the name of Mellon Arena?

How do you feel about the 'BONY'...???
......arena, that is......ugh....

[AaronPGH]

Awful. This is sad as hell. It's more about the city's dignity than the jobs.

[EventHorizon]

Originally Posted by Flash

^Among other things, I wondered that too. And what about the various things Mellon sponsors around town. And the rooftop signage atop One Mellon Center. Would we see the return of the lit setbacks on the "Dravo Building"

You can see those lit setbacks in this stock footage from 1984. If they do revert back to that, I hope they use green lighting.


http://www.speedyshare.com/655769987.html

(just click on this link, then click on the "Pittsburgh Footage.mov" link)

[Flash]

I actually think they should have the setbacks illuminated anyway, with or without the signage. Though according to the latest article in the PG:

"Mellon's Downtown buildings will keep their Mellon signs, he said, and the company will stick to its naming rights deal at the Mellon Arena, home of the Penguins."

[Evergrey]

http://www.pittsburghlive.com/x/pitt.../s_482860.html

Mellon takeover to boost nonprofits

By Rick Stouffer
TRIBUNE-REVIEW
Wednesday, December 6, 2006


Local nonprofit organizations said Tuesday they're excited about increased funding promised with Bank of New York's acquisition of Mellon Financial Corp.
The merger will create a new Mellon Financial Foundation, formed with $20 million from the $60 million existing foundation, plus $60 million in new money, with all funds dedicated to grant-making in Southwest Pennsylvania.

With $80 million in assets, the new Mellon foundation immediately becomes one of the largest in Pennsylvania. According to The Foundation Center's annual survey, Mellon Financial Foundation would rank as the 33rd-largest in-state foundation overall and the third-largest corporate foundation in the state, according to year-end 2004 statistics, the latest available.

The existing Mellon Financial Foundation will be renamed The Bank of New York Mellon Foundation and will use its $40 million in assets for funding projects outside Southwest Pennsylvania.

The new Mellon Financial Foundation's annual giving limit doubles the old foundation's guidelines, to $4 million, according to Mellon. Last year, however, the foundation surpassed the $2 million figure, supporting local causes with $3.4 million, spokesman Ronald Gruendl said.

A funding increase goes against the usual merger method of handling foundation giving, which is to reduce foundation assets, experts said.

"This is a very significant event that does three things," said Judie Donaldson, executive director of Grantmakers of Western Pennsylvania. "First, it sends a message to the community that even though the corporate headquarters is moving to New York, there is a very significant commitment to this area.

"Second, while research shows that often when mergers occur, foundation spending goes down, and we have suffered in other mergers, this sends a very exciting message. And third, it also communicates a very positive message to other corporations" concerning increased giving, she said.

"This announcement creates a great opportunity for arts organizations. It's very forward-thinking by them," said Mitch Swain, CEO of the Greater Pittsburgh Arts Council.

Mellon's annual Report to the Community 2005 said that between 2001-05, charitable investments, sponsorships and employee volunteer efforts totaled more than $140 million everywhere Mellon does business, $27 million in 2005 alone.

Community-related development loans totaled $19 million last year, including funds to construct 18 low-income housing units in Latrobe, and to convert a building in Wilkinsburg into 15 single-room units.

Local nonprofits pointed out that the Mellon Financial Foundation not only supplies grants, but loans, in-kind services, even office furniture.

Among Mellon's numerous projects are Mellon Jazz, a festival that for two decades has supported jazz in Pittsburgh and Philadelphia, and Operation Warm, a nonprofit organization that provides winter coats to disadvantaged children.

With the help of Mellon and other donors, the project has grown from 58 coats distributed in 1998 to 80,000 distributed to children in 30 states in 2005, according to Mellon.

"The foundation has helped us in numerous ways over the last 20 years, in addition to funds," said Donald Block, executive director of the Greater Pittsburgh Literacy Council. "They've sponsored volunteer recruitment drives for us, then offered training to those volunteer recruits. They created a course for nonprofits back in the 1980s in response to the economic downturn in which they showed us how to raise our own funding."

"They supplied us with office furniture when we moved into our new offices a couple years ago," Swain said.



Rick Stouffer can be reached at rstouffer@tribweb.com.

[DBR96A]

I hope PNC buys Bank of New York Someday.

[AaronPGH]

Originally Posted by DBR96A

I hope PNC buys Bank of New York Someday.

Now THAT would be incredible.

[PhillyRising]

Originally Posted by AaronClark

Awful. This is sad as hell. It's more about the city's dignity than the jobs.

We understand...we felt the same way when Mellon and PNC bought up a number of Philadelphia based banks (Girard, PSFS, Provident) over the years. You'll all get over it. Philadelphia survived and so will Pittsburgh. At some point, there will be only a handful of big banks across the country. Losing PNC would be a bigger hit to Pittsburgh.

[ColDayMan]

I thought the headline read "Bank of New York buying a mellon" and thought that was as newsworthy as Paris Hilton seeing Casino Royale at AMC Compton.

[donybrx]

They're all going to end up in Scranton or the lower Poconos someday........like "Wall St. West"

and yes, I'm being real silly......

[Evergrey]

http://www.pittsburghlive.com/x/pitt.../s_483217.html

PNC chief: We won't abandon Pittsburgh

By Rick Stouffer
TRIBUNE-REVIEW
Friday, December 8, 2006


The CEO of PNC Financial Services Group is adamant: His company was born in Pittsburgh, has been successful here and has no plans to uproot its headquarters for New York or anywhere else.
"Our employment is growing here in Southwest Pennsylvania; we're investing in people, in technology and $200 million in (a new) building (Three PNC Plaza)," James E. Rohr said Thursday.

"Our home is here, we're very committed to the community," Rohr said.

Rohr addressed questions regarding his company following Monday's announcement that another Pittsburgh-bred financial giant, Mellon Financial Group, is merging with Bank of New York and relocating its headquarters.





Rohr was interviewed at the Eighth Annual African-American Chamber of Commerce of Western Pennsylvania business luncheon at the Omni William Penn, Downtown.

Rohr said he had no advance notice of the $16.5 billion Mellon-Bank of New York deal. He added that consolidation in the banking industry has been occurring for years and that he has no plans of changing his firm's philosophy from what has made it successful.

"The Mellon deal was a surprise. I had absolutely no inkling of a deal," Rohr said, adding he's sorry to see Mellon's headquarters leave, but emphasizing that Pittsburgh is PNC Financial's home.

PNC is committed to maintaining its business mix, Rohr said.

"With the Merrill deal, a $1 trillion asset manager was created second to none," Rohr said. (Investment manager BlackRock Inc. acquired Merrill Lynch's mutual-fund division for $9.4 billion in October.) "We own 34 percent of BlackRock so we're very pleased with that."

"We have the No. 1 market share within our footprint (where PNC does business) in private banking, we have the No. 1 market share in our footprint in retail banking. We will continue doing what we're doing," Rohr said.

Rohr's speech to the African-American Chamber was upbeat, as he wore his hat as chairman of the Allegheny Conference on Community Development, a multi-county economic development group.

He told 370 chamber members and guests that the region's economy is "really good and getting better." Examples include the fact that the region's unemployment rate is 4.6 percent, an all-time low, and that $3.3 billion has been committed to be spent Downtown over the next few years.

Still, there are issues that must be addressed, Rohr said. Among them are lowering the highest net income tax rate in the nation, reforming the legal tort system, improving the region's transportation system, including reinstating direct flights to Europe and improving traffic flow between Downtown and Oakland, and making government simpler.

"We have 130 municipalities in Allegheny County, 42 school districts," Rohr said. "Think of the expense of government, plus it just makes it hard to do business."



Rick Stouffer can be reached at rstouffer@tribweb.com.