GLOBAL – Mellon Financial Corp. has had informal talks about a possible custody combination with State Street and Northern Trust, the Wall Street Journal has reported.
The WSJ, which cited an unnamed person familiar with the matter, said management at Mellon has held informal talks with its Boston- and Chicago-based rivals.
The Journal also said Pittsburgh-based Mellon had also held “exploratory talks” with Merrill Lynch about possibly linking their asset management divisions.
Spokespersons for Mellon, State Street and Northern Trust declined to comment to IPE.
The paper said Mellon’s chief executive Martin McGuinn is under pressure to maximise value for shareholders.
But in an email to staff seen by IPE, McGuinn denied the company is under pressure to make a major acquisition or divestiture.
“Our board of directors fully understands the environment in which Mellon and our peers are operating, and they appreciate our disciplined approach and the focus with which we execute our strategy,” he wrote.
“But we won’t make rash business decisions that put at risk our long-term stability and growth for the sake of a short-term spike in price.”
McGuinn’s email did not deny that the firm had spoken with State Street and Northern Trust.
He said the WSJ item “simply doesn’t accurately reflect our strategy, our performance or the competitive landscape”.
“Although the environment in which we operate remains challenging, the momentum we’ve generated, our strategic focus and our plan for growth all position us for improved performance.”
The WSJ quoted senior vice chairman Steven Elliot as saying: “Our pre-tax profit margins are 30%. Our return on equity is 20%. Any company that has those kinds of margins and ROE isn’t under pressure.”
Earlier this month the Financial Times said Mellon was considering taking up to a 50% stake in WestAM, a German institutional fund provider that specialises in fixed income.