program that it had been operating through an outside company.
On Thursday, 70 brokers who had been working for the third-party marketer Essex Corp. became employees of Bank of New York's new brokerage, BNY Investment Center. The brokers offer mutual funds, fixed and variable annuities, and other investment products to Bank of New York retail customers at 350 branches.
"This is a real opportunity for us," said John Pugliese, executive vice president and head of the banking company's retail division. "We felt with the growth and critical mass we have achieved it was time to bring the program in-house."
Bank of New York joins a growing number of banking companies that have decided to begin operating their own programs after using an outside contractor to get their investment sales operations up to speed.
The move gives it more say over the types of products it will sell and, more importantly, gives it all the fee income produced by the products.
For the past few years, Mr. Pugliese said, Essex had in essence "been paying rent" for use of the Bank of New York offices and then remitting a portion of the fee income back to the banking company.
He declined to discuss current financial arrangements or estimate the size of the investment product operation's business. But analysts said the move should be lucrative for Bank of New York because it gives the company a full share of commissions in return for overseeing administrative support, clearance, and settlement services for the securities that customers buy.
"This allows them to call the shots," said Gerard Cassidy, banking analyst at Tucker Anthony Cleary Gull Inc. of Boston. "It puts them that much closer to their customers and probably helps in retaining them."
Separately, Bank of New York said Thursday that it has agreed to buy the global trust business of Barclays Bank PLC. This would enlarge an already sizable global custody presence.
Analysts said the deal would strengthen an operation that Bank of New York has built through roughly 30 acquisitions in recent years.
The deal, for which terms were not disclosed, would bring Bank of New York the issuer, agency, and depository business of Barclays in the European market. This involves the record keeping, tax reporting, and exchange of certificates to bondholders on behalf of two large international clearing systems.
"This is a business we've been emphasizing," said Mark Ferraris, senior vice president and division head in Bank of New York's corporate trust business. "We want to leverage our strong domestic custody business into international markets."
