Bank of New York Co. is looking to two recent deals with specialized investment firms to help boost fee income.
In mid-November it bought Estabrook Capital Management Inc., a privately held money management firm in New York. Its clients include educational and religious foundations.
A day later Bank of New York said its ESI & Co. subsidiary was buying Savannah, Ga.-based Institutional Securities Trading LLC, a unit of Investment Performances Services LLC that trades on behalf of union plans. That deal is expected to close by yearend.
Though terms were not disclosed, earlier this year Bank of New York had put aside $500 million for these types of deals.
Bank of New York said Estabrook, which has about 30 employees, will operate independently. Investment Performance said it will keep all 15 employees of Institutional Securities.
The deals demonstrate Bank of New York's strategy of putting its resources behind niche businesses to bolster noninterest income, said Newton P.S. Merrill, senior executive vice president.
"The overall philosophy of Bank of New York is to be an acquirer of complementary businesses," Mr. Merrill said. "Most of these are not very large acquisitions, but when you take them together you have a significant addition to our earnings stream."
The company "continues to buy higher growth, higher margin businesses, particularly in the trust and securities areas," said Andrew Collins, a banking analyst at ING Barings LLC. "These generally turn out to be very accretive by taking advantage of economies."
Estabrook oversees $2.3 billion on behalf of about 350 high-net-worth individuals and 400 institutions.
The firm specializes in value investing, where portfolio managers look for opportunities among out-of-favor industries, a Bank of New York spokesman said. The approach is seen as complementary to Bank of New York's growth strategy, which seeks out investments with the potential to increase dividends and revenue, he said.
The 100 clients of Institutional Securities Trading would become clients of ESI's brokerage operation, said Stephen R. Shloss, president of New York-based ESI.
ESI, which has 200 clients, processes buy and sell orders for managers that invest for pension plans, foundations, and endowments.
"This is part of our growth plan to expand services to more pension plans and asset managers," Mr. Shloss said.
Institutional Securities Trading found it wasn't profitable to continue going it alone, said Herbert C. Skinner Jr., its president.
"The securities business is undergoing a lot of change in terms of delivery," Mr. Skinner said "To maintain a competitive advantage we needed a partner that would enhance our brokerage capabilities."