US investment bank JPMorgan Chase has acquired the retail arm of the Bank of New York in exchange for the company's corporate trust operations plus a cash payment of $150 million.
The deal will give JPMorgan 338 branches with customer deposits of $15 billion in the New York and Tri-State region. Bank of New York president Gerald Hassel said that the board had been considering an exit from the retail business for a while before the deal. We don’t have the scale to compete on a national level, said Hassel.
Under the terms of the deal, The Bank of New York businesses are valued at a premium of $2.30 billion and the JPMorgan corporate trust business is valued at $2.15 billion. JPMorgan plans to convert the branches and expand the network.
The acquisition will assist JPMorgan in the competitive retail banking sector.
The company’s CEO Jamie Dimon said: This is a great addition to our New York City – Tri-State franchise. We fully intend to remain the winner here. The transaction reflects our disciplined strategy of investing capital in core businesses where we can leverage scale and expertise for competitive advantage. In addition to being a great strategic fit, the deal is compelling financially.