In a bid to assume a leading role in the servicing of non-retail asset-backed securities, the Bank of New York has formed a new subsidiary, BNY Asset Solutions LLC. to forge a servicing and trust business specializing in esoteric assets.
Mark Ferraris, senior VP and division head of corporate trust services at Bank of New York, said the bank is not interested in vying for business in the established retail type of securitizations that are usually served by such major banking organizations like Citibank. Instead, the goal of the new operation is "to be a facilitator not a competitor."
The mission of BNY is to become the leading provider of agency and trustee services to new asset classes, which typically have lacked the support and infrastructure needed for both investors and bankers. Ideally, the new unit would play the role of master servicer, providing back-office and collection services as well, Ferraris said.
A key goal of BNY will be to bring additional liquidity and flexibility to some of the more esoteric securitizations where there are just a handful of deals outstanding.
Ferraris cited commercial-mortgage servicing as a potential area for BNY because there is low deal volume, but high dollars and complicated structures.
Other areas where there are potential opportunities are in the securitization of viatical, or "death benefit," contracts, and medical receivables, where there is now a spotty record, he said. In some of these areas, the paucity of actual deal data fosters considerable lag between origination and securitization. It will be the goal of BNY to utilize its franchise to eliminate this drag in the marketplace.
Despite building a major servicing operation for asset-backed securitizations, Bank of New York is not expected to expand as an originator or issuer of asset-backed bonds, Ferraris said.
BNY Asset Solutions represents the consolidation of BNY Trotter Kent LLC, which was acquired earlier this year, with another recent acquisition, Capital Co. of America Client Services LLC, a former affiliate of Nomura Holding America Inc.
At present, the unit services approximately $5 billion of performing commercial-mortgage loans and other commercial assets. It has also been selected to service more than $12 billion of other commercial asset-backed collateral.