MELLON FINANCIAL

 

 Introduction

Mellon financial corporation is one of the largest financial management firms in the world which was founded in 1968. As the bank continued to grow, it remained to be the major driving force behind the huge majority of the mass production revolution more especially in the Midwestern U.S. Despite that one, in 2007, the bank changed its name to The Bank of New York Mellon after merging with the Bank of New York (Carlis & Ryan, 2010). This then made it to become not only the largest security servicing firm but also top ten asset managing firm in the world.

The two banks along with the State Street ended up following essentially similar evolution. All of these strategies were initially large diversified service providers for financial matters especially in any corporate banking space in all the areas where they were located. Regardless of that, extreme competitions in the corporate loans as well as the retail banking business ended up showing them a throw away of their entire daily banking operations in favor of what was perceived as being relatively more stable fee based business (Carlis & Ryan, 2010).  This is to imply that the rationale for this strategy was aimed at mutual investment management in the form of funds as well as other accounts which were separately managed.  Moreover, with the asset servicing, the aim was to offer mutual and better improved services for instance stock transfer services, corporate trust, and depository receipts.

In connection to that, the timing of their merger, 2006, was also an added advantage for their business. This is so because, regardless of the regulatory changes and other business economics of this time, the financial services industry remained to be consolidating rapidly. This then means that the alternative for this was to help the two businesses to avoid the need of looking for other partners to merge with in the near future in case they did not enter into that deal. This was also not to leave then with competitive disadvantage in case two of their large competitors would have combined.

According to Carlis & Ryan, (2010) the other benefits which were to be realized from the strategic rationale of the two parties include things like efficient back-office processing, monitoring, and control of the financial activities. This in return was to have a huge costs fixe component which would be spread over relatively higher volume hence lowering the operating costs. There joint offering of insurance services, investment and banking products would be tailored in turn to offer advanced packages designed for the purpose of meeting the needs of their customers.

Regardless of the competitive advantages that were perceived to rise as the two companies were to merge, still there were other impediments for the deal. For instance, there were constraints to be encountered especially when they required amalgamating some vital, compatible, as well as incompatible computing systems of the two financial institutions.  Moreover, the management authority had witnessed some business merging successfully, the combination of The Bank of New York and Mellon financial corporation was relatively tedious because capturing the entire value of the energies was not only risky but was to take a considerable work (Carlis & Ryan, 2010).  Equally, during the negotiation of the deal, the management team as well as the board of directors for the two parties encountered significant distrust for each other.

Regardless of the above impediments, the two firms managed to enter into a contract. Thus we can say that deal worth doing given all of these barriers. The reason for that is because, first it should be noted that merging with The Bank of New York was a wise idea since it is the oldest banking corporation in the U.S which then implies that it has managed to withstand all of such barriers in the banking market. Conversely, this will be advantageous because initially, it has enabled the two companies to come up with the largest security servicing company in the world as well as an efficient asset management firm. This then mean that as they will continue providing better and improved banking services, they have the capacity of enjoying their economies of scale regardless of these barriers (Carlis & Ryan, 2010).

 

Reference

Carliss Y.B & Ryan T, (2010). Mellon Financial and The Bank of New York. Havard Press