The Pershing unit of Bank of New York Mellon has reported a turnaround in net new assets, following recent outflows caused by the collapse of First Republic Bank. First Republic Bank heavily relied on Pershing for clearing and custody of wealth management assets.
For the third quarter, Pershing recorded an increase of $23 billion in net new assets, as announced on October 17th. This is a significant improvement from the outflows of $34 billion in the previous quarter, although it is lower than the $45 billion added during the same period last year.
Despite the loss of First Republic Bank as a key customer, BNY Mellon CFO, Dermot McDonogh, highlighted the “positive momentum in the underlying business” during the company’s earnings call.
Earlier this year, First Republic Bank experienced a significant decline in deposits and saw numerous advisors leave. The bank was ultimately acquired by JPMorgan Chase in May.
Pershing had been responsible for clearing around $140 billion in assets under administration for First Republic, which accounted for approximately 5% of Pershing’s total assets. This loss is likely to have an ongoing impact on asset flows at Pershing in the upcoming quarters. JPMorgan, having its own custodial capabilities, is in the process of transferring the remaining assets from the acquisition to its own platform.
BNY Mellon’s Pershing Shows Promising Growth with New Technology Platform
BNY Mellon’s Pershing executives are excited about the growth potential of their new technology platform, Wove. During an earnings call, CEO Robin Vince expressed optimism about the platform’s promising start.
Recently, Pershing announced its partnership with Integrity Marketing Group, a leading insurance provider, for the Wove platform. This collaboration allows for the integration of various solutions offered by BNY Mellon. Vince explained that Integrity will now have access to third-party models and institutional-grade solutions from investment management and broker dealer clearing and custody services through Pershing.
Pershing’s assets at the end of the third quarter reached $2.4 trillion, reflecting a 14% increase compared to the same period last year. Furthermore, the company reported a 6% year-over-year rise in revenue, totaling $699 million.
BNY Mellon itself reported better-than-expected earnings for the third quarter. The bank achieved earnings of $1.22 per share and generated $4.4 billion in revenue, surpassing analyst estimates of $1.15 per share and $4.3 billion in revenue, according to FactSet.