Thomas A. Renyi is quite a taciturn fellow, as might be expected from the man who runs a bank that specializes in safeguarding and processing securities.
Yet in the 16 months since he became chairman of Bank of New York Co., Mr. Renyi has supercharged the staid but highly profitable company - the oldest bank in the United States still operating under its original name.
Mr. Renyi has not done anything particularly sexy. He has not plunged the 215-year-old institution into Latin American lending, subprime loans, or stock underwriting.
Rather, he has intensified its prosaic business of doing financial housekeeping for companies and individuals, safekeeping their securities, paying their dividends, and keeping the books on sales and purchases of their stocks, bonds, and other securities.
The 53-year-old chairman and chief executive officer has extended the fee-oriented formula adopted by his predecessor, J. Carter Bacot. He has made higher-profile acquisitions of securities processing and custody portfolios - particularly overseas - and added product capabilities such as securities clearing.
Meanwhile, he has also peeled away less profitable, traditional lending businesses, including mortgage banking and factoring. "He has been looking very carefully at all its businesses to determine whether they have high enough returns," said Bradley Ball, an analyst at Credit Suisse First Boston.
Analysts find it hard to see significant problems down the road for the $64.9 billion-asset institution. The securities business continues to boom around the world, and the likelihood of a surge of competition is small.
Indeed, many other banking companies have left the field, including Bank of America Corp. and J.P. Morgan & Co., because of the massive technology investments required to remain profitable in the business.
That has been great news for Bank of New York and its chief rivals, Boston's State Street Corp. and New York's Chase Manhattan Corp., enabling them to achieve sufficient scale to dominate the business.
Mr. Renyi confidently targets a 24% return on equity this year and a 48% efficiency ratio. Fees accounted for 58% of revenues in 1998 and are projected to rise to a 66% share this year.
Mr. Renyi is betting heavily that his company can boost revenues even further by cross-selling processing, broker/dealer, and other investor services to its roster of corporate clients. He also wants to continue adding products and services and winning new business over competitors.
Already, Mr. Renyi said, about 80% of corporate customers use more than one product, and 10% use more than 10 products, from cash management to custody, stock transfer, and securities clearing. The average customer has six product relationships with the bank, up from three in 1996.
"Revenue growth has been a widespread concern in the industry. It is an issue that all of us face," Mr. Renyi said in an interview in his art deco headquarters at One Wall Street. "We focus on markets and services that have a long-term inherent growth rate."
Mr. Renyi is aiming for 20% to 30% growth in revenues from the bank's securities processing, custody, and related investor services businesses as a result of cross-selling and further acquisitions.
He has been moving aggressively to fortify Bank of New York's position. Of the 43 deals the bank has done since 1994, 11 were made last year alone.
Just three months ago, the company agreed to pay $700 million for the global custody operations of Royal Bank of Scotland. This deal, scheduled to close in the third quarter, would give Bank of New York a launching pad for expansion in Europe.
Late last year, it added securities clearing to its roster of products through the acquisition of an 80% stake in Chicago-based Everen Clearing Corp. The deal was closed in December, and a new business unit, BNY Clearing Services, was established.
Mr. Renyi said he continues to look for deals. Early this year Bank of New York said it had set aside $500 million to buy custody and corporate trust businesses and asset management companies.
He wants to build the company's asset management capability for individuals, Mr. Renyi said. The bank has about $50 billion under management, a total far below the dominant banks in the field.
Despite his determination, he vowed not to pay the high prices the market is demanding. Analysts said this vow restricts what Bank of New York can buy.
"They continue to look for things to acquire, but it has not been easy for them," said George Bicher, an analyst at Deutsche Banc Alex. Brown. "They want to make an end-game kill that will give them a quantum leap in their business. They don't have much to show for their efforts."
As the company adds scale and diversifies its services on the processing side, it has been scaling back capital-intensive activities in which it foresees lower growth.
This month it agreed to sell its factoring company to General Motors Acceptance Corp. The factoring unit was the largest provider of asset-based lending services in the United Kingdom and Canada and second-largest in the United States. Its revenues were projected to rise 10% this year.
In addition, Bank of New York essentially outsourced its mortgage operations, forming a joint venture in November with Alliance Mortgage Co. of Jacksonville, Fla. Under the arrangement, Bank of New York shed the costs of its mortgage operation but continues to share in the profits.
In early 1998, Bank of New York completed the sale of its $4.2 billion credit card portfolio to Chase Manhattan Corp.
The company is investing heavily in technology. Such spending has been rising 12% a year and is expected to total about $400 million this year.
Mr. Renyi "has shown a willingness to get out of slow-growth businesses, but it has not been helter-skelter," said Mr. Ball of Credit Suisse..
Though corporate banking is growing more slowly than custody and processing, it is seen as a vital link to those businesses, Mr. Renyi said. The bank's business with its corporate customers is organized through relationship managers who are trained in lending specialties but are well versed in processing and other services the bank offers.
Corporate loans grew 13% last year, and the business is a major contributor to boosting overall revenues, Mr. Renyi said. "There is a core group of people who own the relationships and who" have incentives "to broaden them," he said.
But fee businesses continue to be the main focus. Bank of New York has amassed $5.1 trillion of assets under administration for 4,000 institutional clients in 87 countries, ranking second behind Chase. The closing of the Royal Bank acquisition would give Bank of New York the lead.
Though revenue growth in its domestic custody business is expected to be slower than on the international side, it remains robust. Bank of New York had 20% revenue growth in U.S. custody services in 1998 and expects 15% this year. Overseas, custody revenues rose 30% last year, and the bank expects the same in 1999.
Bank of New York also ranks second to Chase in corporate trust. Revenues grew 20% last year and are expected to grow another 20% this year, Mr. Renyi said.
American depository re-ceipts-certificates representing shares in foreign companies that are traded on U.S. exchanges-also have been one of the bank's hottest business segments.
Bank of New York commands the largest piece of the business, with a 62% market share in ADR servicing. Last year, its revenues grew 30%, driven by a surge in trading during the global financial crisis in the second half of the year. This year, growth is projected to be at least 25%.
Growth is slower in the branch network, but Mr. Renyi said the branches supply low-cost funds and the opportunity to develop private-banking clients.
Analysts, however, said it is not certain the company will stay in retail banking.
State Street shed its remaining $2.2 billion of commercial loans and $1.6 billion of consumer deposits two months ago to concentrate on processing and asset management, which helped push its price-to-earnings ratio to 30, well above Bank of New York's multiple of 20.
"I would not be surprised to wake up someday and find that Bank of New York's retail business is gone," Mr. Bicher said.
Mr. Renyi, though, showed no inclination to get rid of retail.
In April 1998 he attempted a $24 billion hostile takeover of Pittsburgh's Mellon Bank Corp. The offer would have produced a powerful combination of Bank of New York's processing capabilities and Mellon's investment management services, in addition to expanding Bank of New York's retail operations to Pennsylvania.
The dispute became bitter, with an exchange of nasty letters between Mr. Renyi and Mellon's then-chairman, Frank V. Cahouet, who retired last December. Bank of New York dropped the bid a month after making it.
Now Mr. Renyi insists that Bank of New York can go it alone. "We feel very comfortable that we can sustain our growth," Mr. Renyi said. "We have technology and a product line that are in demand."
But some analysts still think a big merger is possible. "There are still viable ways they could get together with one of the other big processing companies," Mr. Ball said.
Mr. Renyi said the bank's constant evolution is part of a long-term strategy.
"An objective we don't have is asset growth," he said. "We want to be one of the largest in capitalization, with solid, steady earnings growth."