Talks between Bank of New York Mellon, Northern Trust, have been going on for months, source says

Discussions for a potential merger of Bank of New York Mellon Corp., home to clearing and custody giant BNY Pershing, and Northern Trust Corp., which works with extremely wealthy clients, have been ongoing for more than a year, according to one senior industry executive with knowledge of the talks.

The Wall Street Journal reported on Sunday that Bank of New York Mellon approached Northern Trust with the idea just last week, although no specific price tag for Northern Trust, with a market capitalization of $23 billion, has emerged.

But discussions between the two may be farther down the road then believed, said the executive, who spoke confidentially to InvestmentNews because of the sensitivity of the matter.

“The two have had discussions for a while, but whether the Northern Trust shareholders agree to BNY Mellon’s offer is a different story,” said the executive, adding that the talks have gone on for at least 12 months.  

“BNY Mellon has a large presence in Chicago, and that complements Northern Trust, which is mostly in the Midwest and Florida,” he said. “But Northern Trust is saying in public it wants to remain independent.”  

Northern Trust is an enviable target for wealth management clients, said another senior industry executive speaking privately to InvestmentNews. “It’s absolutely loaded with wealthy clients,” the executive said.

“While our policy is to not comment on market rumors, I can tell you that Northern Trust is fully committed to remaining independent and continuing to deliver long-term value to our stakeholders, as we have for the past 135 years,” a Northern Trust company spokesperson said.

A Bank of New York Mellon spokesperson declined to comment.

The share price of Northern Trust (ticker: NTRS) shot up Monday morning more than 10% after the Wall Street Journal’s report, hitting a fresh high of $123.31. on Tuesday afternoon, Northern Trust shares were trading at $118.63.

Bank of New York Mellon is considering its next steps, which might include returning to Northern Trust with a formal bid, according to the report.

The two firms each have an array of businesses that safeguard, manage and move money for companies, investment firms and financial advisors, the Wall Street Journal reported. Bank of New York Mellon is a leading clearing and custody firm, respectively, for broker-dealers and registered investment advisors.

A deal would combine two of the world’s largest asset-servicing businesses and create an investment-management giant that oversees more than $3 trillion.