Bank of New York merging with Mellon Financial

$16.5 billion deal between custodian firm will create 11th largest financial firm

NEW YORK (MarketWatch) -- Investors cheered Monday's $16.5 billion merger agreement between Bank of New York Co. and Mellon Financial Corp. that ranks as the largest marriage of asset managers and creates the nation's No. 1 custodial bank. News of the deal, which will also create the 11th largest financial institution in the U.S., was the latest sign of a pickup in industry consolidation and it lifted shares across the banking sector. Custodial banks handle account and transaction paperwork for financial institutions, and also, in a growing business, provide clients with services like securities lending.
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