Bank of New York, Mellon Deal Looks To Be a Winner for City

In what several business leaders, civic groups, and scholars are calling another boost for New York City's reputation as the world's financial capital, Bank of New York yesterday said it would acquire Mellon Financial in a $16.5 billion stock deal and that the new firm would maintain its headquarters in the city.

"This reaffirms the continuing hegemony of New York as a banking center," a professor of urban policy and planning at New York University's Wagner School, Mitchell Moss, said."It's simply impossible to be an important bank and not have a major … headquarters in New York City anymore."

A half-dozen people interviewed about the acquisition all used language strikingly similar — that the deal between the Bank of New York and Mellon indicates that New York is continuing to affirm itself as a pre-eminent nexus of finance.

Even the enlarged company's new name, Bank of New York Mellon Corp., speaks to the power of New York, the leaders said.

"They could have made the name Mellon Bank. They didn't have to keep the Bank of New York name," the chairman of the Association for a Better New York, William Rudin, said. "But they obviously thought it was very important" to keep New York in the brand.

Mellon's headquarters will be relocated from its longtime home in Pittsburgh, where it was founded in 1869 as Mellon & Sons' Bank.

The 220-year-old Bank of New York has played a storied part in New York's and America's history: In 1789, Alexander Hamilton negotiated the national government's first loan from the bank, according to a company history.

More than two centuries later, two of the bank's locations, at 101 Barclay St. and 100 Church St., were nearly destroyed in the terrorist attacks of September 11, 2001.

"They suffered significant damage," the president of the Partnership for New York City, a business leadership group, Kathryn Wylde, said.

"This acquisition demonstrates that they have fully recovered and have bounced back and are continuing in a position of world leadership," she said of the bank, which was one of her public-private partnership's first members.

More than two years ago, the bank opened a center in Brooklyn with more than 1,000 jobs that officials said would have otherwise left the city.

A Mellon spokesman, Ron Gruendl, said that after the transaction is completed in late 2007,Mellon's Pittsburgh operation would see a net gain of a few thousand jobs, although the new firm hopes to eliminate a total of 3,900 employees companywide. More than 6,000 people now work for Mellon in Pittsburgh.

Both companies said yesterday morning that "several business divisions," such as the technology and operations sectors, would be based in Pittsburgh.

A Manhattan Institute fellow, Nicole Gelinas, said the result of the acquisition could be that New York City will have even more jobs that reward employees in the six-, seven-, and eight-figure ranges.

That the new company will have its headquarters in New York means that Pittsburgh will lose one of its remaining powerhouses. Mellon will join companies such as Westinghouse, which abandoned Pittsburgh when it acquired CBS and then appropriated the press giant's name and came to New York.

"Pittsburgh is a charming industrial city, but there's no way that it could make it as a banking capital in the 21st century," Mr. Moss said yesterday.

A Bank of New York spokesman, Kevin Heine, said the firm wouldn't forget Pittsburgh.

"We recognized that a key component of this transaction was continuing to support Pittsburgh in a strong way," Mr. Heine said.

The Bloomberg administration said the deal would likely be a plus for New York City. "Although it's too early to fully gauge the impact of this merger, we expect that this combination will be beneficial for all stakeholders, including New York City," Deputy Mayor Daniel Doctoroff said in a statement.