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Change may be coming to BNY Mellon, but in what form?

Change

Seemingly every week, big-name activist investors like Carl Icahn and Bill Ackman take huge positions in a company eyeing oftentimes radical changes. The end goal is always to “create greater shareholder value” – a euphemism that sounds much better than “making more money for myself.”

The targets range industries – electronics giants, clothing retailers and even nutritional supplement companies that may or may not be pyramid schemes. But rarely are they ever banks. Wall Street has to follow more regulations than any other industry, making banks less attractive to activist investors proposing major changes.

That’s what makes the news surrounding BNY Mellon so intriguing. On Monday, famed activist investor Nelson Peltz announced a 2.5% stake in the bank, valued at roughly $1.05 billion. The Wall Street Journal reports that he is looking to “create more shareholder value.” How does he propose achieving such a goal? That’s the mystery.

If you look at BNY Mellon, cost cutting – a key goal for most activist investors – is already well underway. The bank just sold its headquarters and is moving further downtown. Heck, they even considered New Jersey. It’s also been trimming assets and other expenses, resulting in a 34% jump in shares over the past year.

While Peltz has been mum on his ideas for the firm, other than saying he plans to meet with the bank’s executives, analysts have been busy making their best guesses. Possibilities include even more aggressive cost cutting, consolidating technology platforms, selling off additional pieces of the business and even spinning off its asset management unit, something wave-making analyst Mike Mayo urged earlier this year.

BNY could even use its stockpile of cash to begin lending like a traditional bank, creating yet another funnel for revenue, one analyst suggested to Bloomberg.

Either way, something is brewing, and shareholders don’t seem to mind. The stock is up 3% since Monday.

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