S&P: U. K.-Based The Bank of New York Mellon (International) Ltd. Rated 'AA-/A-1+' On Core Strategic Status; Outlook Stable
We view BNYMIL as a core subsidiary of The Bank of New York Mellon (BK) group. As a result, we do not determine a stand-alone credit profile for BNYMIL. Instead, we regard BNYMIL as synonymous with that of its parent BK and therefore align the ratings on BNYMIL with our assessment of BK's group credit profile at 'aa-' and the 'AA-' long-term rating on the group's other core operating companies.
We use the supported group credit profile as the reference point for equalizing the ratings because we anticipate that, under the construct of the U. S. resolution regime, BK's core and highly strategic operating subsidiaries would be supported. As a result, BNYMIL as a core entity would likely continue to service its senior obligations on time and in full. The group's holding company, The Bank of New York Mellon Corp., is rated two notches lower than its core operating companies. This reflects the structural subordination of the holding company's creditors to those of the operating companies and our expectation that additional loss-absorbing capacity would benefit the senior unsecured creditors of the main operating companies in a gone-concern scenario, but not those of the holding company.
BNYMIL is a U. K.-based custody bank and fully owned indirect subsidiary of The Bank of New York Mellon Corp. It is owned via an intermediate holding company Bank of New York Mellon Holdings (U. K.) Ltd. The bank operates through its offices in the U. K. but also through a branch in Luxembourg to service the local funds of U. K.-domiciled global fund managers. BNYMIL's main activities are investment services, with a focus on asset servicing (custody and fund accounting) and issuer services (such as trustee and depositary services). We view these operations to be fully in line with the group's global investment services and believe BNYMIL enables the group to fully service its U. K. and global clients.
Our assessment of BNYMIL's core status within the wider BK group is based on BNYMIL's:Ultimate ownership and control by The Bank of New York Mellon Corp.;Close link to the group's reputation and its dependence on the group's brand recognition since it shares the same name; Full alignment within BK's asset-servicing strategy as the operating company and booking center in the U. K. for the group's products, namely fund accounting services, trustee and depositary, custody services, transfer agency services, and other alternative investment services; Close integration with the group's operations, information technology systems, management, and financial planning. We believe this organizational structure makes a separation of BNYMIL from the group highly improbable; andOur expectation that the group will support BNYMIL's future growth or provide additional capital and liquidity, if needed, in any stress situation. The stable outlook on BNYMIL mirrors that on the parent BK. It also reflects our expectation that BNYMIL's core status within the BK group will remain unchanged. We expect that BNYMIL will further strengthen its position as one of the major components of BK's European global custody activities, while maintaining a conservative approach to its businesses.
An upgrade or downgrade of BK over the next two years would result in a similar rating action on BNYMIL, all other factors remaining unchanged.