Stock Transfer in 2008/2009 – What Didn’t Happen

In the summer of 2008 rumors started flying about changes in the offing among players in the stock transfer business.   The changes did not happen, but it may be instructive to look at what did not transpire both for why it did not, and why it still might.

It is by now widely believed that the largest U.S. transfer agent in terms of shareholders served (which is part of a bank) was almost acquired by the majority owner of the largest U.S. transfer agent in terms of corporate clients served (which is not part of a bank).   Why this almost happened ranges from a financial loss sustained by the big bank agent for misplacing shareholder data, from the loss of some key “name” clients to competitors, from a perceived apathy toward the business by the bank’s executive management, and from quality scores in industry surveys that spelled lackluster results in the bank’s future new business pursuits.   Why it did not happen ranges from distraction from a business sale due to the financial crisis in the fall of 2008 and the doling out of TARP money to big banks; the resultant “delay of focus” into 2009, by which time the financial losses of 2008 were already booked and “proxy season” was looming (the worst time to announce a stock transfer business sale); and a possible change in executive management’s feelings about selling stock transfer, as evidenced by the parent bank CEO’s participation in a stock transfer client event in mid-2009.   So, we consider this potential acquisition of one big player by another off the table.   For now.

There was a regional bank transfer agent of size in the Great Lakes area that was acquired by an even larger bank not far from it, who had gotten out of the stock transfer business in the 1990s.   So the question over the past nine months has been whether the big bank would divest this stock transfer portfolio like it did its previous one (i.e., sell it to another agent), or re-think stock transfer as a “cross-sell” opportunity and hold onto it as a new financial service offering to corporate clients.   The stock transfer business in question is very highly regarded by its clients and industry peers alike, undoubtedly making its incorporation or disposition that much more difficult to evaluate.   Bottom line:  nobody knows what will happen here.   It was another probability (divestiture) that did not happen, and may not happen.   For now.

There were also active rumors toward the end of 2008 that a brand new player would soon enter the U.S. stock transfer marketplace.   This more mysterious, but no less broadly heard, notion gravitated toward the U.K., where a couple of big transfer agents have been known to pine after a foothold in the U.S for some time now.   It also gravitated toward other big U.S. shareholder services industry participants, who might want to expand their powers into the realm of stock transfer.   But that has not happened either, and the trail there is as cold as it is for the other “expected” developments cited above.   For now.

So, the world of stock transfer has not in fact changed in terms of major participants, in a period of time when such change was considered inevitable.   This could be due to everyone’s preoccupation with the world economy.   It could also be due to current owners of name brand stock transfer businesses recognizing these are not services to be lightly discarded now, or ever.