Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • Consultants
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2023
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
January 16, 2019 12:00 AM

BNY absorbs severance costs as investment management, wealth assets drop 6%

Danielle Walker
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg

    BNY Mellon's investment management and wealth management units reported $1.84 trillion in AUM as of March 31.

    Bank of New York Mellon's investment management and wealth management businesses reported $1.722 trillion in assets under management as of Dec. 31, down 6% from three months earlier and down 9% compared to a year earlier, according to parent BNY Mellon's quarterly earnings release.

    Meanwhile, the parent company has incurred severance charges related to employee separations as part of a longer-term cost savings plan, the company's chairman and CEO Charles Scharf said during an earnings call Wednesday.

    Within the investment management business, net outflows totaled $18 billion during the fourth quarter, compared to net inflows of $15 billion during the previous quarter and net inflows of $12 billion during the fourth quarter of 2017.

    Client redemptions largely came from index and cash strategies, which saw $11 billion and $10 billion, respectively, in net outflows in the fourth quarter. Index strategies saw $3 billion in net outflows in the third quarter, whereas cash strategies had zero net inflows during the same period.

    Regarding staff cuts, Mr. Scharf said that, during the previous quarter's earnings call, he mentioned there was "a significant opportunity to reduce management layers and increase spans of control."

    Compare fund flows and AUM of publicly traded money managers with P&I's Earnings Tracker

    "This quarter's GAAP results include a severance charge related to these actions — many of which we have already completed. We anticipate that the payback on this severance will be less than one year. These savings — and other efficiencies we continue to drive towards — will allow us to continue to increase our investment in technology and infrastructure without significantly increasing our expense base," Mr. Scharf said.

    "But as I also said on last quarter's earnings call — while these changes result in lower costs, they help advance our culture by improving decision-making, allowing us to move more quickly, and making sure we have our best people in roles which allow them to grow and contribute more significantly to our growth agenda," he added.

    Non-interest expense for the overall parent company was down 1% year-over-over.


    Of note, non-interest expense for BNY’s “other” segment — which falls outside of its core investment services and investment management business segments and primarily includes leasing operations, certain corporate treasury activities, derivatives, business exits and other corporate revenue and expense items — increased year-over-year. The non-interest expense increase, to $160 million in the fourth quarter from $135 million the year prior, primarily reflected expenses associated with higher severance and the firm relocating its corporate headquarters to New York's Tribeca neighborhood from 225 Liberty St., which is also in lower Manhattan, said a fourth quarter financial highlights report issued Wednesday.

    When asked how many jobs were cut, or if they impacted investment management staff, a company spokeswoman only provided a statement via email: "We continue to optimize our global business structure to increase efficiency, enable faster decision-making and better serve our clients. As a result of these strategic actions, periodic staff reductions may occur," the response said.

    Regarding its remaining asset classes, BNY's investment management business reported $2 billion in net outflows across its multiasset and alternative investments strategies during the quarter ending Dec. 31, compared to $2 billion in net inflows the prior quarter and $2 billion in net inflows during the fourth quarter of 2017, the earnings release said.

    Equity strategies saw $8 billion in net outflows during the fourth quarter, and $2 billion in net outflows the previous quarter and $6 billion in net outflows in the third quarter of 2017.

    Fixed-income strategies had $1 billion in net outflows during the fourth quarter, $2 billion in net inflows in the third quarter and $2 billion in net outflows in the third quarter of 2017. Meanwhile, liability-driven investment strategies have seen steady inflows, with $14 billion in net inflows in the fourth quarter, $16 billion in net inflows in the third quarter and $23 billion in net inflows in the fourth quarter of 2017.

    AUM in fixed-income strategies totaled $200 billion as of Dec. 31, down 1% from Sept. 30, and down 3% from Dec. 31, 2017. LDI assets were $659 billion as of Dec. 31, up 1% from Sept. 30 and down 1% from Dec. 31, 2017.

    Cash strategies had $260 billion as of Dec. 31, down 4% from Sept. 30 and down 12% from Dec. 31, 2017. Index strategy AUM totaled $301 billion as of the end of the fourth quarter, down 14% for both Sept. 30 and Dec. 31, 2017.

    Assets under management in equity strategies was $135 billion as of Dec. 31, noticeably down 19% from Sept. 30 and down 16% from Dec. 31, 2017; and AUM in multiasset and alternative investments was $167 billion as of Dec. 31, down 9% from Sept. 30 and down 22% from Dec. 31, 2017.

    At parent BNY Mellon, assets under custody and administration were $33.1 trillion, down 4% from Sept. 30 and down 1% from Dec. 31, 2017.

    Investment management and performance fees in the fourth quarter were $893 million for the fourth quarter, down 3% from the third quarter and down 7% from Dec. 31, 2017.

    Parent company revenue totaled $4 billion, down 2% from Sept. 30 and up 7% from the fourth quarter of 2017. Asset management revenue in the fourth quarter was $660 million, down 6% from the quarter ending Sept. 30, and down 11% from the fourth quarter of 2017.

    Net income for the parent company was $832 million for the quarter, a marked 23% drop from the quarter ending Sept. 30, and down 26% from the quarter ending Dec. 31, 2017.

    The company no longer discloses the percentage of assets under management in specific investment strategies.

    Related Articles
    Bank of New York Mellon names new head of asset servicing for the Americas
    BNY Mellon brings on head of digital to develop fintech
    BNY Mellon to shutter EACM Advisors hedge funds-of-funds business
    BNY Mellon lifts out quantitative management team from Salient Partners
    BNY Mellon's assets increase 1.27% for quarter on inflows of $15 billion
    Morgan Stanley's AUM falls for the quarter, year as revenue gains
    State Street Global Advisors' AUM down for quarter, year
    Santa Barbara County Employees taps Mellon Investments for 4 passive portfolios
    Recommended for You
    65 Equity Partners adds partners in Europe, U.S.
    HSBC AM chooses head of U.K. credit solutions
    Jack Chee
    IM Global Partner Fund Management names U.S. CIO
    Multiple Tailwinds Propel Private Credit
    Sponsored Content: Multiple Tailwinds Propel Private Credit
    Sponsored
    White Papers
    2023 Hot Topics in Retirement and Financial Wellbeing
    Bonds: Shaken, but Not Stirred
    A Study of Allocations to Alternative Investments by Institutions and Financial…
    Unlocking Hidden Value in Japan
    The Art of the Possible in Data Automation for Institutional Investors
    Parnassus View - Investing in AI: Transformative New Tech, Same Old Rules
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • Consultants
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2023
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars