On Tuesday, Bank of New York Mellon Asset, a unit of the global financial services company, Bank of New York Mellon Corp. (BK) announced its expansion plans for India. With this expansion the company expects to boost its presence in Asia, which fared much better than other global economies during the financial crisis.
BNY Mellon Asset has been unable to find any appropriate asset firms to acquire in the European market. However, in the last eighteen months, the company has made three major deals – tying up with London based Insight Investment, buying asset service units of PNC Financial Services Group Inc. (PNC) and Germany’s BHF Asset Servicing. BNY Mellon aims to increase its presence in India considering that it does not have much business tie ups in the country.
BNY Mellon already has a presence in Japan, Taiwan and China. The company’s latest plan follows announcement of a joint venture with a Chinese firm and increasing work force by 40% in Japan in the past two years. In Japan, where BNY Mellon already has a significant presence, it aspires to grow organically given the presence of very less independent asset managers and growth anticipated in investment trust fund and pension fund over the near future.
BNY Mellon is soon expected to receive regulatory approval for its asset management joint venture with Western Securities in China. Thus, the company will become another major bank to enter the Chinese markets apart from JPMorgan Chase & Co. (JPM), Goldman Sachs Group, Inc. (GS) and UBS AG (UBS). Recently, BNY Mellon also announced that the company’s happy experiences with the country’s banks, securities investment trust firms and government funds has made it keen to broaden its horizon in Taiwan.
BNY Mellon has been benefiting from partnering with already existing institutions and leveraging their local presence with its global capabilities. Moreover, India being an emerging economy, the latest expansion plan implementation will help the company in increasing its revenue and asset base in the long term.
Though BNY Mellon is well positioned to benefit from the growth of global financial assets, supported by an effective expense management, modernization of public pension schemes and growth in cross-border investing, we expect interest-bearing deposit costs to rise faster than asset yields due to competitive pressure, thereby negatively impacting net interest income.
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