ATLANTA - The Bank of New York is adding yet another sizable book of corporate trust business to its Southeast lineup by acquiring Birmingham, Ala.-based AmSouth Bank's department, one of the largest in its home state.
Bank of New York yesterday announced it has signed a definitive pact to purchase all of the approximately 1,000 accounts - worth a total of $14.2 billion - in AmSouth's bond administration and stock transfer businesses.
Terms of the deal were not disclosed. But BONY expects to start serving AmSouth's accounts in the third quarter of this year.
Completion of the acquisition will boost the bank's Alabama business significantly, said senior vice president Mark Ferraris, who manages his firm's corporate trust services.
"This clearly gives us a much more meaningful market share than we had before," Ferraris said. "And it fits in very nicely with the overall strategy we have for the Southeast."
AmSouth's is the 10th corporate trust department BONY has acquired in the Southeast in the past five years. Nationally over that same span, it has purchased 22 corporate trust businesses.
An increasing number of banks have decided in recent years that their corporate trust efforts were only marginally profitable, and sold them off. In AmSouth's case, the it decided the business is better suited for larger banks that can compensate for thin profits by compiling huge books, according to spokesman Jim Underwood.
"It's been profitable for us, but it's been slower growth for the last several years," Underwood said. "This is one of those areas where bigger is better when it comes to volume."
BONY controls 20% of the national corporate trust market, Ferraris estimated. It will open a Birmingham office to serve AmSouth's clients. Ferraris estimated the office will have 15 workers, most of whom he hopes will come from AmSouth.
BONY has decided it made business sense to open an office based largely on the size of the book and the high concentration of clients within Alabama. In past acquisitions, it has alternately opened offices or decided it could manage the business from New York City.
The company's previous trust acquisitions have raised some concerns from clients that preferred to keep their business local.
But Jefferson County, Ala., finance director Steve Sayler confirmed that his county has relied on AmSouth for decades.
As of now, Jefferson can change trustees without bonholder approval, but so far has no plans to do so, he said.
