Penson Worldwide, a US-based brokerage, will sell its Australian subsidiary to investment management and securities services firm BNY Mellon, in a bid to cut costs and generate much needed cash gains.
In a share purchase transaction worth A$33 million (US$32.9 million) and expected to be finalised in Q4 2011, Penson Financial Services Australia (PFSA) will become an affiliate of Pershing, BNY Mellon’s clearing and execution outsourcing services subsidiary.
The deal should provide Penson with a gain of US$14 million, continuing cost-cutting measures the firm initiated in August in a bid to ease the financial pressures of low trading volumes and interest rates. The measures aim to generate US$100 million through asset sales and improved utilisation of existing capital to create annual cost savings of US$24 million.
The firm has already combined its US broker-dealer arm and US futures business with the aim of making more efficient use of capital. Penson has also stated it is considering shedding more of its international businesses, including its UK subsidiaries.
PFSA provides clearing services for Australian market participants and is a member of the Australian Securities Exchange and upstart alternative trading platform Chi-X Australia.
“We are pleased to have reached agreement with a firm committed to continue to provide PFSA’s correspondents with the high level of service to which they have been accustomed, while also continuing to provide access to Australian markets for Penson correspondents,” said Philip A. Pendergraft, chief executive officer, Penson.