Stock Transfer Agent Disappearing Act Continues

On August 3, 2009 the stock transfer business of National City Bank (Cleveland), one of the biggest and best of the country’s regional stock transfer providers, was sold by its new parent, PNC Financial Services Group, to Computershare.   The list of transfer agent choices for public companies is, as a result, becoming almost uncomfortably short.

Not that PNC can be blamed for this development, nor Computershare.   PNC sold its legacy stock transfer business back in the 90s, like virtually every other large bank has done – except Wells Fargo and BNY Mellon.   If a stock transfer operation is not substantial these days it is living on borrowed time within a financial institution.   PNC took over “NatCity” as an organization in October 2008 (the heat of “TARP”) and de facto inherited NatCity’s medium-sized but highly-qualified and popular stock transfer division.   (Its clients include no less than Marathon Oil, Humana, Abercrombie & Fitch, Ashland Inc. and Briggs & Stratton.)  All told NatCity has 155 clients, with 500,000 registered shareholders.   Wells Fargo has approximately 450 clients and 3 million shareholders; BNY Mellon approximately 1,350 and 35 million, respectively; and American Stock Transfer approximately 2,700 and 8 million, respectively.   In the U.S., Computershare already had around 2,600 clients and 20 million shareholders on its books; however, globally it dwarfs any other provider, with 10,000 corporate clients and 100 million shareholders served.

So this acquisition is as understandable as it is regrettable.   On the heels of Computershare’s acquisition of SunTrust’s business in 2006, and U.S. Stock Transfer and UMB Financial’s businesses in 2007, its acquisition of NatCity was true to form.   It would have also made sense if American Stock Transfer or BNY Mellon had been the acquirer, the former having bought Wachovia’s business in 2006, and the latter LaSalle Bank’s business in 2008.   Wells is less acquisitive, seeming to prefer growing its business organically.

We say this acquisition is regrettable because competition within the industry is reduced even further.   We have essentially arrived at a point where qualified providers for medium to large-size stock transfer clients can be counted on one hand.   We can therefore only hope that some of the smaller providers – in NatCity’s weight class – can grow fast enough to rival the big players, before they themselves are gobbled up.   We can even imagine a sizable, brand-new entrant onto the playing field, if a large “collateral” shareholder services provider decides to bring its physical and human resources to bear in such an endeavor.