BNY Pershing Faces Massive Deconversions of Client Assets Following First Republic Collapse

In the world of finance, the collapse of a major institution can have far-reaching effects. Last year, the collapse of First Republic led to a massive deconversion of client assets for giant custodian BNY Pershing. However, in a recent earnings call, BNY Chief Financial Officer Dermot McDonough expressed optimism about the firm’s future despite the challenges they have faced.

McDonough acknowledged the outflow of $23 billion in client assets but highlighted the influx of 21 new wealth management clients using the firm’s technology. This new business is helping BNY Pershing stay on track with its target of $30 million to $40 million in additional tech revenue. McDonough emphasized the resilience of the team in earning their way through the deconversion process and expressed confidence in the firm’s ability to navigate the challenges ahead.

One key development for Pershing was the renewal of its agreement with Osaic, a major player in the independent wealth management space. Osaic CEO Jamie Price praised BNY Pershing as a leading platform provider, highlighting the firm’s stability and commitment to innovation. Additionally, midsize firm Arete Wealth expanded its agreements with Pershing to access the Wove platform, further demonstrating the appeal of Pershing’s technology offerings.

Despite the challenges of the deconversion process, Pershing saw positive growth in its assets under custody or administration, which rose 8% year over year to $2.6 trillion. Inflows into BNY’s direct wealth management business also contributed to a year-over-year increase in client assets to $308 billion in the second quarter. Revenue for Pershing increased 3% from the year-ago period, driven by elevated asset values and client activity.

Overall, BNY’s Investment and Wealth Management segment showed strong performance, with pretax income of $704 million on revenue of $1.54 billion. The firm’s direct wealth and asset management business also saw growth, with pretax income of $149 million on revenue of $821 million.

Looking ahead, BNY CEO Robin Vince highlighted the potential of the Wove technology platform to enhance the firm’s capabilities and provide solutions for clients. By linking various BNY capabilities, Pershing and Wove clients can access a range of services to manage and aggregate data across multiple custodians.

In conclusion, while the deconversion process has presented challenges for BNY Pershing, the firm’s resilience, innovation, and commitment to client service are driving positive momentum. With a strong foundation and a focus on technology and client relationships, BNY Pershing is well-positioned for continued success in the evolving financial landscape.