Bank of New York Mellon sees more opportunities in Europe than in the Asia. BNY (ticker:BK) did not suffer as much as your typical bank because it’s more of a custodian bank (State Street ) than a retail bank (JP Morgan, Citibank, Bank of America) or investment bank (Goldman, Morgan Stanley)
The four largest custodian banks are in size order
1. JP Morgan
2. Citibank
3. State Street
4. Bank of New York Mellon
JP Morgan and Citibank ( think repayment of TARP, as well as all the bad loans still on their books) are conglomerate banks that include investment bank operations as well as retail bank operations. The bad residental and commerical mortgage loans will prevent them from engaging in any M&A activity for quite a while. State Street and BNY are pure play custodian banks, that have come out of this economic crisis relatively unscathed.
A few reasons why BNY may look towards Europe rather than Asia.
1. Europe seems to be lagging in terms of recovering from this economic crisis. Things might be cheaper on a valuation basis.
2. European politicans seem keen on splitting bank’s lending operations from their ancillary operations such as mortgage processing, investment banking, proprietary trading arms. These forced actions may provide BNY excellent businesses at firesale prices.
3. The Chinese government doesn’t allow any foreign firms 100% controll over any business in China, they have to partner up with an existing business ( this is also known as knowledge transfer).
As the financial uncertainty continues, it might be worth looking into financial firms that have profitable business lines ( custodian bank services, mortgage processing, insurance processing, electronic payment processing, anything that ends with processing will be a decent chance that these business lines come with recurring revenues and good margins).
Bank of New York Mellon link
http://us.mobile.reuters.com/mobile/m/FullArticle/CMAT/ninnovationNews_uUSTRE59Q08620091027
