- The Washington Times - Wednesday, January 8, 2003

NEW YORK, Jan. 8 (UPI) — The Bank of New York Co. Inc., the nation's oldest bank and founded in 1784 by Alexander Hamilton, said Wednesday it has entered into a definitive agreement with Credit Suisse First Boston to acquire its Pershing unit in a deal valued at $2 billion.

Pershing is the largest global provider of correspondent clearing services and outsourcing solutions for brokers, asset managers and other financial intermediaries.

Under the terms of the deal, Bank of New York will pay $2 billion in cash, representing a premium of $1.4 billion over book value of Pershing. The lender said the amount may be adjusted higher by up to $50 million based on the level of Pershing's 2003 revenue growth.

The deal will be financed from the public issuance of debt and equity, estimated to be approximately $900 million and $1.1 billion, respectively.

The transaction is expected to close by the end of the second quarter of 2003.

Excluding one-time charges of 6 cents a share, the Bank of New York said the deal is expected to be dilutive to earnings by 2 to 3 cents a share in 2003.

In 2004, the first full calendar year after the deal closes, the transaction is expected to be accretive to the lender's earnings by 2 to 3 cents a share, including $115 million of projected pre-tax cost savings and incremental revenue related opportunities.

The deal has been approved by each company's board of directors but is subject to customary regulatory approvals.

Pershing is a correspondent clearing firm, providing financial services outsourcing solutions, investment-related products and services, and financial product distribution. With headquarters in Jersey City, N.J., the company has approximately 4,000 employees worldwide at 13 locations in the United States, Europe and Asia.

Pershing has a client base of more than 850 broker-dealers and investment managers and supports approximately 100,000 investment professionals at these firms. This client base represents more than 5 million customer accounts. Pershing also holds approximately $400 billion of total customer assets, including $160 billion of money market and mutual fund assets.

Thomas A. Renyi, chairman and chief executive officer of the Bank of New York, said, "Strategically, Pershing is an exceptional fit for the Bank of New York's global franchise.

"Not only does it augment our fastest growing business segment, but it also builds upon our three core strengths — innovative product capabilities, a well-diversified global client base, and extensive product distribution network. This strengthens our position as the premier global securities services provider and accelerates the continuing transformation of our business model," Renyi said.

John Mack, Credit Suisse First Boston's CEO and co-CEO of Credit Suisse Group, said: "We are pleased to have reached this agreement with the Bank of New York. Pershing is a strong company with a solid reputation in the correspondent clearing marketplace, and the Bank of New York has a global leadership position in securities servicing. We believe both companies and our customers, including those of CSFB Private Client Services, will greatly benefit from this transaction."

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