Tags: Bank | New | York | Mellon | Raise | Dividend

BNY Mellon to Buy Back $1.3 Billion of Shares After Fed Review

Tuesday, 22 Mar 2011 12:45 PM

Bank of New York Mellon Corp., the world’s largest custody bank, raised its quarterly dividend by 44 percent and plans to repurchase $1.3 billion of shares this year after the Federal Reserve approved the measures.

The bank will lift the dividend to 13 cents a share from 9 cents, payable on May 10, BNY Mellon said today in a statement from New York.

The company raised the number of common shares available for repurchase to almost 47 million.

BNY Mellon joins rival State Street Corp. in returning more capital to shareholders after the Fed reviewed the ability of the largest U.S. lenders to withstand another economic slump. Even with the capital measures, the bank said it expects to exceed the Tier I common capital requirements by the end of the year under new rules known as Basel III.

“Our strong balance sheet and significant capital generation should continue to provide us with the flexibility to pursue the opportunities for growth that our business model affords, as well as return capital to our shareholders,” Robert P. Kelly, chairman and chief executive officer of BNY Mellon, said in the statement.

BNY Mellon cut its dividend from 24 cents in April 2009 when plunging equity markets triggered a drop in its recordkeeping and money-management fees.

State Street, the third-largest custody bank, last week raised its quarterly dividend to 18 cents a share from 1 cent and said it will buy back as much as $675 million in common stock this year. The firm, which is based in Boston, had reduced its quarterly payout from 24 cents on Feb. 5, 2009, in an effort to preserve capital amid the financial crisis.

Custody banks earn fees for keeping records, tracking performance and lending securities to institutional investors such as mutual funds, pensions and hedge funds.

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