Bank of New York Mellon Launches $500M Public Offering of Preferred Stock Shares

The Bank of New York Mellon Launches Public Offering

The Bank of New York Mellon Corporation (BNY) has made headlines with its recent announcement regarding a significant public offering of depositary shares, each representing a fraction of its preferred stock. On March 3, 2025, BNY revealed that it had priced an offering of 500,000 depositary shares, each equating to a 1/100th interest in its Series J Noncumulative Perpetual Preferred Stock. The offering comes with a notable liquidation preference of $100,000 per share, translating to $1,000 per depositary share, setting the total public offering price at a substantial $500 million.

This strategic move is poised to benefit both investors and the bank, as these depositary shares are expected to yield attractive dividends. Specifically, dividends will accumulate on the liquidation amount of $100,000 per share at an annual rate of 6.300% from the original issue date until, but not including, March 20, 2030. After this date, the dividend rate will transition to a rate calculated based on the five-year treasury rate plus an additional margin of 2.297%.

However, dividends will only be disbursed if declared by BNY’s board of directors and provided that the company has legally available funds for this purpose. Investors are also presented with the option of redeeming the preferred stock at the bank's discretion on or after March 20, 2030, for cash equal to the $100,000 per share plus any dividends that have been declared but not paid.

The financial industry giants Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, UBS Investment Bank, and BNY Mellon Capital Markets, LLC have all been engaged as joint book-running managers for this offering, further solidifying the transaction's significance in the market.

BNY has voiced its intent to channel the net proceeds from this offering toward general corporate purposes, which holds immense potential for bolstering its operational capacity and leveraging growth opportunities. The initial filing for this public offering was made on October 18, 2024, and since then, various amendments, including a preliminary prospectus supplement, have been made to keep prospective investors informed.

The prospectus also emphasizes the importance of understanding the associated risks prior to any investment, and urges potential investors to thoroughly review BNY’s filings with the Securities and Exchange Commission (SEC) for comprehensive details.

In terms of reputation, BNY has established itself as a leading global financial services provider, renowned for its long-standing history of over 240 years. Partnering with over 90% of Fortune 100 companies and nearly all top 100 banks globally, BNY plays a crucial role in securing funding for government projects and safeguarding investments for millions of individuals. As of December 31, 2024, BNY had managed a staggering $52.1 trillion in assets under custody, showcasing its commanding presence in the financial landscape.

Headquartered in New York City and employing over 50,000 personnel globally, BNY continues to garner recognition, as seen in its listings among Fortune's World's Most Admired Companies and Fast Company's lists of Best Workplaces for Innovators.

In summary, BNY’s recent public offering serves not just as a financial maneuver to bolster its capital but also reinforces its standing as a formidable player in the global financial sphere, navigating the complexities of investment strategies and enhancing shareholder value.