BNY Calls In Series F Preferred Shares on September 20

The Bank of New York Mellon Corporation said it will fully redeem all outstanding shares of its Series F Noncumulative Perpetual Preferred Stock, along with the corresponding depositary shares, on September 20, 2026.

The Bank of New York Mellon Corporation, which trades under the symbol BK and now markets itself simply as BNY, has told holders of its Series F Noncumulative Perpetual Preferred Stock that the paper is being called. Every outstanding Series F share, and every depositary share representing a fractional interest in those shares, will be redeemed on September 20, 2026.

The announcement, reported by GuruFocus, is a full redemption rather than a partial one. There is no remaining stub of the series, no pro-rata allocation among holders, and nothing left outstanding after the redemption date.

What a full call on a perpetual preferred actually does

Preferred stock sits between debt and common equity. It pays a fixed dividend and ranks ahead of the common shares if a bank is wound up, but behind depositors and bondholders. “Noncumulative” means that if the issuer skips a payment, it never has to make it up — a feature bank regulators insist on, because it makes the instrument loss-absorbing rather than a hard obligation. “Perpetual” means there is no maturity date: the security runs indefinitely unless the issuer chooses to redeem it, which is precisely what BNY is now doing.

Because most large-bank preferreds are issued in denominations too big for retail buyers, they are usually sold in the form of depositary shares — each one representing a fixed fraction of a full preferred share. Retiring the underlying preferred automatically retires the depositary shares stacked on top of it, which is why the announcement covers both.

For holders, the practical effect is straightforward. On the redemption date, the position converts to cash. The income stream stops. Anyone who has been counting on that dividend as part of a fixed-income allocation has a reinvestment decision to make, and roughly a month to make it. Investors who bought above the call price on the secondary market — a common trap in the preferred space when a series has been trading well above par — take the difference on the chin.

Why banks retire preferred series

The specific dollar size and coupon of the Series F issue were not disclosed in the summary of the announcement, so the exact saving in dividend expense cannot be calculated from what has been made public. But the logic behind these calls is well worn.

Preferred stock counts toward Additional Tier 1 capital, the layer of a bank’s regulatory capital that sits above common equity. It is expensive capital: the dividend is paid out of after-tax income, unlike interest on debt. When a bank has more Tier 1 capital than its regulatory requirements and its own internal buffers demand, retiring the costliest slice is a direct improvement to returns on common equity. Every dollar of preferred dividend not paid is a dollar available to common shareholders.

A call also tends to signal that management is comfortable with where capital ratios sit and where they are heading. Banks do not retire loss-absorbing capital when they are worried about the cushion. The alternative reading — that the series was simply due to be refinanced at a better rate — is equally benign for common holders, though in that case the saving shows up as a lower coupon on a replacement issue rather than as an outright reduction in the capital stack.

The share price backdrop on announcement day

The stock was under pressure while the news landed. As of the last trade at 15:52 GMT on August 20, 2026, BK changed hands at 159.76 in the licensed market feed, down 2.54% on the day from a prior close of 163.93, having traded between 159.40 and 165.07. The feed does not state the quote currency, so the figures are given as printed. A second line quoted under the BNY symbol showed 159.45, off 0.19% from 159.76, within a 159.04 to 161.01 band.

That move came on a broadly red tape. The S&P 500 tracker (SPY) was at $765.98, down 0.40%; the Nasdaq 100 proxy (QQQ) sat at $711.45, down 0.65%; and the Dow tracker (DIA) traded at $529.93, down 0.81%. The bank’s decline outpaced all three, which suggests the day’s action in the common stock was being driven by something other than a routine capital-management notice. Preferred redemptions are almost never a catalyst for the common shares — they are plumbing, announced through the transfer agent, and priced in by the fixed-income desk rather than the equity desk.

What holders and watchers should track next

Three things are worth following between now and the redemption date. The first is whether BNY issues a replacement preferred series. A new issue in the weeks around September 20 would recast the transaction as a refinancing and would tell you something about the coupon the bank can command in the current rate environment. Silence would suggest the capital is simply being taken out.

The second is the trading behaviour of the depositary shares themselves. Once a call is announced, the price of the depositary shares typically converges toward the redemption price plus accrued dividend, and the yield quoted on screens becomes meaningless. Screening tools that still show a headline yield on a called security are showing a number that will never be paid.

The third is what management says about capital deployment at its next scheduled disclosure. Retiring preferred stock is one lever among several — buybacks, common dividends, and balance-sheet growth compete for the same capital. How this call fits alongside those choices is the part that matters for common shareholders, and it is the part the redemption notice, by design, does not address.

For income investors, the wider point is a familiar one: a perpetual security is only perpetual at the issuer’s discretion. The call option belongs to the bank, and it gets exercised when it suits the bank, not the holder.

Key facts

• Security redeemed: Series F Noncumulative Perpetual Preferred Stock and corresponding depositary shares
• Redemption date: September 20, 2026 — full, not partial
• BK last trade: 159.76, -2.54% on the day, as of 15:52 GMT Aug 20, 2026 (currency not stated in feed)
• Market backdrop: SPY $765.98 (-0.40%), QQQ $711.45 (-0.65%), DIA $529.93 (-0.81%)

Frequently asked questions

What exactly is BNY redeeming?

BNY is redeeming all outstanding shares of its Series F Noncumulative Perpetual Preferred Stock, together with the depositary shares that represent fractional interests in those preferred shares. It is a full redemption, so nothing in the series remains outstanding afterwards. The redemption takes effect on September 20, 2026.

What happens to my depositary shares on the redemption date?

They cease to exist as a security and are converted to a cash payment on September 20, 2026. The dividend stream stops at that point. Holders who paid more than the redemption price in the secondary market absorb the difference, and anyone relying on the income needs to arrange a replacement investment.

Why would a bank call a perpetual preferred it never has to repay?

Preferred dividends are paid from after-tax income, which makes the instrument expensive capital. If a bank holds more Additional Tier 1 capital than its regulatory requirements and internal buffers demand, retiring the costliest series lifts returns to common shareholders. Banks can also call an old series to refinance it at a lower coupon.

Does this affect BNY common shareholders?

Indirectly and modestly. Retiring preferred stock removes an ongoing dividend obligation that ranks ahead of the common dividend, which frees income for common holders. But the dollar size and coupon of the Series F issue were not disclosed in the announcement summary, so the precise effect on dividend expense cannot be calculated from public detail.

How did BNY shares trade the day the redemption was announced?

As of the last trade at 15:52 GMT on August 20, 2026, BK was quoted at 159.76, down 2.54% from a prior close of 163.93, within a day range of 159.40 to 165.07. That decline was steeper than the S&P 500, Nasdaq 100 and Dow trackers, all of which were also lower on the day.

Is a preferred redemption a signal of financial strength or weakness?

Generally strength, or at least comfort. Preferred stock is loss-absorbing regulatory capital, and banks do not retire loss-absorbing capital when they are anxious about their cushion. The neutral alternative reading is a simple refinancing, where a new series replaces the old one at a coupon better suited to current rates.

Sources

• The Bank of New York Mellon Corporation (BNY) Announces Full Redemption of Series F Preferred Stock — GuruFocus

Photo: MINEIA MARTINS · Pexels Licence — source