Bank of New York says it plans to expand its corporate trust business globally by opening up trust units abroad, leveraging the offices it already has in 31 countries.
Karen Peetz, an executive vice president and the head of Bank of New York's corporate trust unit, said her company is considering opportunities in Japan, Germany, India, China, and in Latin American countries such as Brazil and Mexico. On Monday it entered the Australian market through a joint venture.
"The place for expansion is in global markets," Ms. Peetz said, because overseas debt issues are projected to surpass those in the United States within five years.
Bank of New York's Australian venture is with Trust Co. of Australia Ltd. The joint venture will supply securitization trustee and other agency-related services to Australia-based issuers of debt.
Ms. Peetz said the Sydney-based joint venture, which is expected to begin operating June 1, would leverage the Australian company's local presence and Bank of New York's experience and technology.
The U.S. company said it already supplies securitization trustee and agency services to Australian issuers for their offshore residential mortgage-backed securities offerings. Ms. Peetz said many opportunities exist in the Australian market.
"Australia is developed on the debt market side, especially with mortgage-backed securities," she said. "In fact one of the major attractions of Australia is that is it just a developed country in terms of its financial and legal systems, and we expect rapid expansion into other asset-backed securities and collateralized debt obligations. This market is going to look and feel more and more like the United States."
Ms. Peetz said Bank of New York sought the Trust Company of Australia alliance in an effort to get into the market more quickly. In other markets, she said, the bank would seek trust powers, then start up a de novo corporate trust unit.
"We need to be able to operate in these countries, so we need to get trust powers in each country," she said. "We are not going to look for joint ventures in these other countries. In Australia this was a perfect opportunity for a joint venture, but we want to develop on our own elsewhere."
Ms. Peetz said the corporate trust business will look to leverage the bank's existing sites in 31 countries in order to develop business. The bank already has corporate trust business in London, Brussels, Singapore, and Canada.
"It is going to be easier to go into markets where we already have a branch than to just come in and establish trust powers and start from scratch," she said. "We want to go where the bank is already a known entity."
Bank of New York administers $2.7 trillion of securities outstanding. Worldwide, it says it is the largest winner of new issues and second to JPMorgan Chase & Co. in all areas of debt. Analysts said Bank of New York would continue to face stiff competition in its corporate trust business from JPMorgan, Citibank, Deutsche Bank, and HSBC Holdings PLC.
"The key to continued growth is global expansion," said Burton Greenwald, an analyst at BJ Greenwald Associates in Philadelphia. "There is a great deal of saturation in the United States while global markets are still untapped." To increase its share, he said, Bank of New York must find new markets and be first to establish its presence in them.
Ms. Peetz said Bank of New York and JPMorgan are well positioned to continue gathering share.
"We have a leg up because we are already established in London, where we have access to all of Europe and the Middle East and Africa," she said. "We want to use our business and our branch locations in different countries to grow from here."
