With Bank of New York's acquisition of Pershing finalized on May 1, the industry is eagerly awaiting news of how the combination will integrate and operate going forward.
At a briefing, executives shed insight on the future of the aggregation. Richard Brueckner, chief executive officer of Pershing, explains that the prosperity of the partnership will come from a common cultural view of customer service. "The reason for our success will be that our managements think alike as far as putting our customers first," he says.
One of the major points of discussion was conversion of BNY clients to Pershing's proprietary clearing platform. However, despite speculation of resistance to the integration from BNY clients, Brueckner promises a smooth transition, and notes that 86 percent of BNY customers have already committed to the transfer from BNY to Pershing's platform.
Joseph Velli, senior executive vice president of BNY and head of the BNY Securities Group, explains that the vast majority of BNY customers are happy. "We know they have choices and they've chosen to stay with us," he explains.
Velli says that the integration schedule has already begun, with the first major customer conversion completed on May 7. He adds that the integration is running on schedule and expected to be completed by October 1 of this year.
In addition, John Colao, managing director of the Customer Technology Group at Pershing, says that BNY clients will use Pershing's front-office platform, NetExchange Pro. The solution will, however, incorporate many aspects of BNY's front-office solution, Compass. "We did a side-by-side analysis of the two products and came to the conclusion that NetExchange Pro had significant uptakes for the Bank's customers," he says. However, Colao says that NetExchange Pro will take advantage of many of Compass' advantageous components, including its report center, market-data tools and role-based viewing ability for the user.
Velli also says that there will be significant sensitivity and flexibility to the customer's needs, noting that customers will be able to service their clients in whatever style they choose. "No matter how an asset manager trades or how an organization clears, we want to provide a model to service that client," he says. "If our clients are successful, we're going to be successful."
In addition, Velli notes that a major goal of the partnership will be to focus on offering a full set of outsourcing solutions to broker/dealers, including middle- and back-office functionalities. "More and more brokers are using outsourcing as a solution. Other brokers are under significant pressures to downsize, and they need to focus on their front-office and trading desks," he says.
Velli says that he predicts more conglomerates in this marketplace in the future, such as Fidelity's recent acquisition of Correspondent Services Corporation, eventually resulting in a small handful of dominant players.
Regardless of the acquisition, the two firms will still operate under separate identities, retaining their distinct names.