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BNY Mellon to shut transition management
14 March 2014
Follows strategic review of business model
BNY Mellon is to close its beta and transition management
arm after deciding that it is not a core part of its business
It is a big turnaround decision for the custody bank given that
it has provided transition management services to pension
funds, sovereign wealth funds, endowments, foundations and
other institutional clients since 1983.
"This step is part of a proactive and ongoing refocusing of
our strategic priorities within investment services. We want to
ensure the optimal use of our resources and expertise as we
look to provide the highest level of service to our clients
globally," said a spokesperson for BNY Mellon.
The bank expects to close the business within the next few
months. It will look help clients to find and move to a
replacement provider for their strategies and positions.
The team of 35 employees will also be affected. BNY Mellon said
it would make every effort to deploy them within the
Last June the bank issued a statement claiming that it was
expanding its transition management capabilities to serve large
investment companies that use outside firms to manage some or
all of their investment strategies, such as insurance firms
that manage registered 40 Act Funds. BNY Mellon created a
registered investment advisor to enable it to provide these
Mark Keleher, CEO of BNY Mellon beta and transition management,
said in the statement dated June 24 2013: "We're seeing growing
demand for transition management services from insurance
companies and other financial intermediary complexes that
manage 40 Act Funds."
He added that while regulatory changes were leading many
broker-dealer transition managers to quit the business, demand
was rising for transition managers that are registered
Last May Credit Suisse closed part of its transition
management business, closely followed by a revelation that
JPMorgan was shutting its US and UK transition management
businesses. ConvergEx also left the sector shortly after.