Summary
The Bank of New York Mellon Corporation (BNY Mellon) filed an 8-K on December 9, 2009, to report on the substantial completion of a restructuring of a portion of its investment securities portfolio. This restructuring involved residential mortgage-backed securities (RMBS) and was previously disclosed in their Q3 2009 10-Q filing. The key event on December 3, 2009, saw BNY Mellon subsidiaries sell $5 billion worth of RMBS (fair value at Sept 30, 2009) to a trust (CSMC Series 2009-ASG) in exchange for 100% of the subordinated Class B certificates of the trust and $770.7 million in principal amount of Class A Notes. These Class A Notes were sold to third-party investors and are rated AAA by DBRS. The sale itself did not result in a significant gain or loss. However, due to new accounting standards (SFAS No. 167), BNY Mellon will be required to consolidate the trust starting January 1, 2010, meaning the RMBS will appear as assets and the Class A Notes as liabilities on their balance sheet. The company anticipates this consolidation will not materially impact its capital ratios or financial condition.
Key Highlights
- 1BNY Mellon completed a significant restructuring of its RMBS portfolio on December 3, 2009.
- 2The transaction involved selling $5 billion (fair value at 09/30/2009) in RMBS.
- 3In return, BNY Mellon received subordinated trust certificates and $770.7 million in Class A Notes.
- 4The Class A Notes were sold to third-party investors and are rated AAA.
- 5The sale of RMBS did not result in a material gain or loss.
- 6BNY Mellon will consolidate the trust starting January 1, 2010, due to SFAS No. 167.
- 7Consolidation is not expected to significantly impact BNY Mellon's capital ratios or financial condition.