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BNY Mellon prepares branding campaign, 4Q profit jumps 23%

| Wednesday, Jan. 16, 2013, 8:02 a.m.

The Bank of New York Mellon Corp. is preparing a branding campaign that will start before the end of March, a top executive said on Wednesday.

“We're making some investments in our brand, and we'll roll that out in the first quarter,” Chief Financial Officer Thomas Gibbons told analysts on a conference call after BNY Mellon reported a 23 percent jump in quarterly earnings.

BNY Mellon announced last week that it had hired a high-powered marketing veteran to be its chief marketing executive. Judy Hu has 30 years of marketing experience, including global head of advertising and branding for General Electric Co., a position she held since 2002.

Hu also worked at Leo Burnett, one of the world's leading advertising agencies, responsible for such major clients as United Airlines.

BNY Mellon would not discuss the brand marketing campaign because it had yet to begin, said spokeswoman Lane Cigna.

“I think they want to get the brand out there to focus on the positive services and products that they provide customers,” said Marty Mosby, an analyst at Guggenheim Securities LLC, Memphis. “Their position in Europe and Asia are places where they could incrementally add market share.”

During the past two years BNY Mellon has been fighting lawsuits filed by the Justice Department and several states, including New York, Florida, Virginia and California, over fraud claims related to BNY Mellon's foreign-exchange practices. The Justice Department in 2011 accused BNY Mellon of netting more than $1.5 billion from overcharging clients for more than a decade. The bank has denied claims in the lawsuits.

In November, BNY Mellon and Virginia authorities ended their dispute, with Virginia agreeing not to pursue a lawsuit against BNY Mellon and to pay $1.1 million to a whistle-blower group that revealed the covert charges. They were disclosed because of work by Grant Wilson, an informant who worked on BNY Mellon‘s trading desk Downtown. Wilson left BNY Mellon in 2011.

Analyst Mosby doubted the marketing campaign would focus on foreign currency exchange.

Meanwhile, BNY Mellon reported net income jumped nearly 23 percent to $613 million in the October-December quarter because of stronger fee income from managing and administering investments.

Results equaled 53 cents a share, compared with 42 cents a year earlier. Mosby said that was in line with Wall Street expectations.

BNY Mellon shares closed on Wednesday at $26.04, down 74 cents.

Investment management fees increased 17 percent to $853 million, while investment servicing fees rose 1 percent to $1.6 billion. Both improvements were from higher stock market values, as well as gains in new business.

CEO Gerald Hassell said revenue and profit have been challenged by investor uncertainty, including jitters about fiscal policy and Congress' impending vote on the debt ceiling.

“We are seeing some people putting money to work, but for the most part, there's a lot of cash sitting on the sidelines,” Hassell told analysts.

For example, foreign exchange and other revenue dropped 39 percent to $139 million from $228 million a year ago. The bank cited a decline in volume and volatility.

BNY Mellon's total assets under management increased 10 percent to a record $1.4 trillion as of Dec. 31. Assets under custody and administration grew 9 percent to $26.7 trillion.

Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or tolson@tribweb.com.

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