BNY Announces Pricing of Public Offering of $500,000,000 of Depositary Shares Representing Interests in Preferred Stock

Rhea-AI Summary

BNY (NYSE: BK) has announced the pricing of a $500 million public offering of depositary shares, each representing a 1/100th interest in Series J Noncumulative Perpetual Preferred Stock. The shares are priced at $1,000 per depositary share, with a liquidation preference of $100,000 per preferred stock share.

The Series J preferred stock will pay dividends at a 6.300% annual rate until March 20, 2030, after which the rate will adjust to the five-year treasury rate plus 2.297%. The stock may be redeemed at BNY's option on March 20, 2030, or any dividend payment date thereafter. The offering, led by multiple joint book-running managers including Deutsche Bank Securities and Goldman Sachs, is expected to close on March 10, 2025.

The company plans to use the net proceeds for general corporate purposes.

Positive

• Successful $500M capital raise strengthens financial position
• Attractive 6.300% dividend rate for investors
• Strong syndicate of major investment banks as joint book-runners

Negative

• Potential increase in dividend expenses
• Future dividend payments subject to board approval and availability of funds
• Variable rate after 2030 introduces interest rate risk

Insights

Financial Analyst

BNY Mellon's $500 million preferred stock offering represents a strategic capital raising move that strengthens the bank's tier 1 capital position. The 6.3% dividend rate until 2030 is competitive in the current rate environment while providing investors with relatively attractive yields compared to common equity.

The structure of this offering—noncumulative perpetual preferred stock with a defined dividend reset mechanism—gives BNY flexibility in capital management. The redemption option beginning in 2030 provides the bank with future optionality to refinance if rates become more favorable.

For the balance sheet, this $500 million capital infusion enhances regulatory capital ratios without diluting common shareholders. The "general corporate purposes" designation for proceeds gives management broad discretion but typically supports lending activities, potential acquisitions, or regulatory capital requirements.

From a cost of capital perspective, preferred equity sits between debt and common equity, making this a moderate-cost funding source. The bank's ability to execute this offering through major underwriters (Deutsche Bank, Goldman Sachs, Morgan Stanley, RBC, UBS) indicates strong institutional demand and market confidence in BNY's financial position.

Banks typically issue preferred stock to optimize their capital structure while maintaining regulatory capital requirements. This offering appears to be routine capital management rather than addressing any urgent funding need.

NEW YORK, March 3, 2025 /PRNewswire/ -- The Bank of New York Mellon Corporation ("BNY") (NYSE: BK), a global financial services company, today announced that it priced an underwritten public offering of 500,000 depositary shares, each representing a 1/100^th interest in a share of its Series J Noncumulative Perpetual Preferred Stock, with a liquidation preference of $100,000 per share (equivalent to $1,000 per depositary share), at a public offering price of $1,000 per depositary share ($500,000,000 aggregate public offering price). Dividends will accrue on the liquidation amount of $100,000 per share of the Series J preferred stock (equivalent to $1,000 per depositary share) at a rate per annum equal to 6.300% from the original issue date to, but excluding, March 20, 2030; and from, and including, March 20, 2030, at the "five-year treasury rate" (as defined in the preliminary prospectus supplement) as of the most recent reset dividend determination date plus 2.297%. Dividends will be paid only when, as and if declared by the board of directors of BNY (or a duly authorized committee of the board) and to the extent that BNY has legally available funds to pay dividends. On March 20, 2030, or any dividend payment date thereafter, the Series J preferred stock may be redeemed at BNY's option, in whole or in part, at a cash redemption price equal to $100,000 per share (equivalent to $1,000 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to but excluding the redemption date. 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 served as joint book-running managers for the offering. The offering is expected to close on March 10, 2025. 

BNY intends to use the net proceeds from the sale of the depositary shares for general corporate purposes, as further described in the preliminary prospectus supplement.

BNY filed a shelf registration statement (including a prospectus) on October 18, 2024, as amended on December 5, 2024 (the "Registration Statement"), and a preliminary prospectus supplement on March 3, 2025, and will file a final prospectus supplement, relating to this offering with the Securities and Exchange Commission (the "SEC"). Prospective investors should read the Registration Statement (including the base prospectus), the preliminary prospectus supplement, the final prospectus supplement (when filed) and other documents BNY has filed and will file with the SEC that are incorporated by reference into the Registration Statement for more complete information about BNY and the offering, including the risks associated with the securities and the offering. This press release does not constitute an offer to sell or the solicitation of any offer to buy securities of BNY, nor shall there be any offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The offering was made only by means of a prospectus supplement and accompanying base prospectus. Copies of the Registration Statement, the preliminary prospectus supplement, the final prospectus supplement (when filed) and other documents that BNY has filed with the SEC that are incorporated by reference into the Registration Statement are available at no charge by visiting EDGAR on the SEC's website at www.sec.gov. Alternatively, a copy of the prospectus supplement and accompanying base prospectus relating to these securities can be obtained by contacting Deutsche Bank Securities Inc. at 1-800-503-4611, Goldman Sachs & Co. LLC at 1-866-471-2526, Morgan Stanley & Co. LLC at 1-866-718-1649, RBC Capital Markets, LLC at 1-866-375-6829, UBS Investment Bank at 1-833-481-0269 or BNY Mellon Capital Markets, LLC at 1-800-269-6864.

About BNY
BNY is a global financial services company that helps make money work for the world – managing it, moving it and keeping it safe. For more than 240 years BNY has partnered alongside clients, putting its expertise and platforms to work to help them achieve their ambitions. Today BNY helps over 90% of Fortune 100 companies and nearly all the top 100 banks globally to access the money they need. BNY supports governments in funding local projects and works with over 90% of the top 100 pension plans to safeguard investments for millions of individuals, and so much more. As of December 31, 2024, BNY oversees $52.1 trillion in assets under custody and/or administration and $2.0 trillion in assets under management. 

BNY is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Headquartered in New York City, BNY employs over 50,000 people globally and has been named among Fortune's World's Most Admired Companies and Fast Company's Best Workplaces for Innovators.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements, which may be expressed in a variety of ways, including the use of future or present tense language, relate to, among other things, BNY's expectations with respect to the offering and use of proceeds.  These statements are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY's control).  Actual outcomes may differ materially from those expressed or implied as a result of risks and uncertainties, including, but not limited to, the factors identified above and the risk factors and other uncertainties set forth in BNY's Annual Report on Form 10-K for the year ended December 31, 2024 and BNY's other filings with the SEC.  All statements in this press release speak only as of the date on which such statements are made, and BNY undertakes no obligation to update any statement to reflect events or circumstances after the date on which such forward-looking statement is made or to reflect the occurrence of unanticipated events.

Contacts:

Investors
Marius Merz
+1 212 298 1480
marius.merz@bny.com

Media
Garrett Marquis
+1 949 683 1503
garrett.marquis@bny.com

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SOURCE BNY

FAQ

What is the dividend rate for BNY's new Series J Preferred Stock offering?

The Series J preferred stock will pay dividends at 6.300% annually until March 20, 2030, then adjust to the five-year treasury rate plus 2.297%.

How much capital is BNY (BK) raising through its Series J Preferred Stock offering?

BNY is raising $500 million through the public offering of depositary shares representing Series J Preferred Stock.

When can BNY (BK) redeem the Series J Preferred Stock?

BNY can redeem the Series J preferred stock on March 20, 2030, or any dividend payment date thereafter, at $100,000 per share.

What is the price per depositary share for BNY's Series J Preferred Stock?

Each depositary share is priced at $1,000, representing a 1/100th interest in a share of Series J Preferred Stock.