BNY Mellon to Buy Cutwater Asset Management from MBIA - Analyst Blog

As part of its plan to continue boosting core operations, The Bank of New York Mellon Corporation (BK) announced a deal to buy Cutwater Asset Management, a wholly owned subsidiary of MBIA Inc. (MBI). Based in Armonk, NY, Cutwater is a fixed income and solutions specialist with approximately $23 billion in assets under management.

Notably, the terms of the deal were not disclosed by either party. The transaction, expected to close in the beginning of first-quarter 2015, is still subject to regulatory approvals.

Following the closure, Cutwater will be integrated into BNY Mellon's Investment Management division and will be administered by the company's fixed-income and return-focused subsidiary, Insight Investment. Cutwater offers a diversified range of fixed income strategies including core, long duration, high yield, loans and absolute return strategies.

BNY Mellon already has two U.S. subsidiaries – Standish Mellon Asset Management Company, LLC and Mellon Capital Management Corporation – that provide fixed income solutions. Hence, with the addition of Cutwater, the company's capability to provide specialized fixed income solutions across the U.S. will receive a boost. Apart from these subsidiaries in the U.S., BNY Mellon has Insight Investment, Alcentra Group and Newton Group in UK; and Meriten Investment Management GmbH headquartered in Germany.

Recently, the company has been streamlining and focusing on its core operations to overcome slow economic growth and stringent regulations. Amid growing demand for fixed-income solutions, we believe the latest acquisition would aid BNY Mellon alleviate its revenue pressure to some extent.

Currently, BNY Mellon carries a Zacks Rank #3 (Hold). Two better-ranked finance stocks are Laporte Bancorp, Inc. (LPSB) and Northfield Bancorp, Inc. (Staten Island, NY) (NFBK), both sporting a Zacks Rank #1 (Strong Buy).