PNC, Sumitomo Mitsui Said to Weigh Bids for BNY Mellon Trust Arm

May 13, 2014 9:20 pm ET

May 14 (Bloomberg) -- PNC Financial Services Group Inc. and Sumitomo Mitsui Financial Group Inc. are among the banks weighing bids for Bank of New York Mellon Corp.’s corporate trust arm, people with knowledge of the matter said.

BNY Mellon is reaching out to potential buyers and is expected to solicit initial bids soon, one of the people said, asking not to be identified discussing private information. Pittsburgh-based PNC and Tokyo-based Sumitomo Mitsui haven’t yet decided if they’ll place bids, the people said.

The unit has also drawn interest from Mitsubishi UFJ Financial Group Inc., people with knowledge of the matter said this month. BNY Mellon is working with Goldman Sachs Group Inc. to sell the unit, which may fetch more than $2.5 billion, people familiar with the matter have said.

For PNC, buying BNY Mellon’s corporate trust would return the lender to a business line it retreated from 16 years ago. PNC sold its corporate trust business in 1998. A key rival, Minneapolis-based U.S. Bancorp, went the other way, building one of the country’s top corporate trust businesses by acquiring trust operations from Wachovia Corp. and State Street Corp.

Spokesmen for BNY Mellon, PNC, Sumitomo Mitsui and Goldman Sachs declined to comment.

BNY Mellon’s corporate trust arm helps companies process payments on debt they issue and works with investors to recover their money if companies default. The business could offer an acquirer with an existing trust business an advantage of scale - - enabling them to cut costs and boost profits.

Japanese banks are looking for acquisitions abroad as they look to offset weak profitability from lending at home. Tokyo- based Mitsubishi UFJ purchased Thai lender Bank of Ayudhya Pcl for about $5 billion in December, and Sumitomo Mitsui agreed to buy 40 percent of Indonesia’s PT Bank Tabungan Pensiunan Nasional for about $1.5 billion last May.

BNY Mellon’s trust unit has 3,500 employees at 61 offices around the world, according to the New York-based bank’s website. It services about $12 trillion in outstanding debt for its clients.

--With assistance from Elizabeth Dexheimer in New York and Shingo Kawamoto and Shigeru Sato in Tokyo.