8-KEarnings & ResultsMaterial AgreementsExhibits & Filings

Bank of New York Mellon Corp 8-K Report, Material Agreement (Jul 6, 2012)

Filed July 6, 2012For Securities:BKBK-PKBNYBNY-PK

Summary

The Bank of New York Mellon Corporation (BK) filed an 8-K on July 6, 2012, primarily to disclose a significant settlement and provide an update on its capital position. The company reached a Stipulation of Settlement for $280 million to resolve claims related to losses from investments in Sigma Finance Inc. This settlement is subject to court approval and aims to release BNY Mellon from all Sigma-related claims by the alleged class members. The company also recorded an after-tax charge of approximately $210 million in the second quarter of 2012 related to these Sigma investments.

Key Highlights

  • 1BNY Mellon entered into a $280 million settlement agreement to resolve claims arising from Sigma Finance Inc. investments.
  • 2The settlement is subject to court approval and covers claims from a putative class action lawsuit.
  • 3An after-tax charge of approximately $210 million was recorded in Q2 2012 due to Sigma investment-related claims.
  • 4BNY Mellon provided a preliminary estimate on the impact of new Basel III risk-based capital rules.
  • 5The new Basel III rules are expected to increase BNY Mellon's Basel III Tier 1 common equity ratio by over 100 basis points.
  • 6As of March 31, 2012, BNY Mellon's Basel III Tier 1 common equity ratio was 7.6%.
  • 7The expected increase in the capital ratio is attributed to a reduction in risk-weighted assets for BNY Mellon's securities portfolio.

Frequently Asked Questions

This 8-K filing is primarily to disclose a material definitive agreement, specifically a settlement agreement related to losses from Sigma Finance Inc. investments, and to provide an update on the company's financial results and capital position in light of new regulatory rules.

BNY Mellon agreed to a payment of $280 million as part of the Stipulation of Settlement. This amount is subject to court approval.

BNY Mellon recorded an after-tax charge of approximately $210 million (or $350 million pre-tax) in the second quarter of 2012, primarily related to these Sigma investment claims.

BNY Mellon estimates that the new Basel III risk-based capital rules, once fully implemented, will increase its Basel III Tier 1 common equity ratio by over 100 basis points. This is largely due to an estimated reduction in risk-weighted assets related to its securities portfolio.