A View from One Wall Street
Born in the U.S. and raised in Ireland, BNY Mellon’s Brian Ruane represents a new kind of Irish presence on Wall Street. His success is built on a sound understanding of financial practices on both sides of the Atlantic.
As Ireland emerges from its post Celtic Tiger hangover it is men like Brian Ruane who will be important to building new confidence in the structures there. His opinion is sought at the highest levels of government and academia.
In part, this is because he moves so easily between Ireland and America and has insight into both countries. Low-key but exuding a quiet confidence, Ruane has strong opinions on the need to be positive about Ireland, especially in difficult times.
Ruane and his wife, Dublin-born Anna Lynch, and their four kids, Sarah, Emma, Jack and Ellie, were about to embark on a family summer vacation to Ireland soon after we spoke. It is a country he is very familiar with. Ruane was born in the U.S. and spent the early years of his life in Chicago before returning to Ireland with his father, who was born in Crossmolina, Co. Mayo, and mother, from Drumhaldry, Co. Longford.
He graduated from Coláiste Éanna, Rathfarnham, Dublin in 1982 and from The Chartered Association of Certified Accountants in the U.K. and Ireland in 1989 and the Zarb School of Business, New York in 1995. That year, he returned to America and began working in financial services on Wall Street. Unlike many of the Irish who came to America a few decades before him, when Ruane returned to the U.S. he was already highly educated, prepared and poised to enter the world of international financial services.
At only 45 years of age, Ruane has already achieved so much. He served as BNY Mellon’s executive vice president of Client Management, where he had responsibility for financial institution clients during the financial crisis, and was named CEO of BNY Mellon’s Alternative Investment Services in 2009. Earlier this year, he assumed his current role as CEO of BNY Mellon Alternative and Broker-Dealer Services.
In his new position he oversees BNY Mellon’s successful hedge fund services business – much of it based in Ireland – but also elsewhere in Europe, Asia and North America, including New York, Luxembourg, Poland, Hong Kong, Singapore and Wilmington, Delaware. Today, it is estimated that over 40% of the world’s hedge funds are serviced in Ireland, and BNY Mellon has a lion’s share. Its 1,800 staff members make it one of Ireland’s largest employers.
Despite the difficult economy, the hedge funds industry is experiencing strong growth there, and BNY Mellon is at the forefront.
As reported by the Irish Funds Industry Association (which, significantly, is in the process of opening offices in the U.S. and London), in 2010 the Irish funds industry experienced a record-breaking year, reaching an all-time high of €1.9 trillion – up €0.5 trillion from 2009 – and this after a noticeable retreat during the financial crisis in 2008.
Ireland, together with Luxembourg, is now one of the preferred locations for setting up and housing hedge funds, due to its respected regulatory environment. It is home to 63% of all European hedge funds and administers 43% of global hedge funds. This growth, as many industry analysts and executives have pointed out, is significantly greater than that experienced by other parts of the world.
Though Ireland is enjoying particularly abundant growth in the funds industry, Ruane points out that this is the global trend within the alternative investment services industry. Alternative investments (hedge funds, funds of hedge funds, private equity funds – essentially most investments other than stocks, bonds and cash) are on the rise again, with confidence instilled by new, post-credit-crisis regulations. As a whole, the industry now has more than $2.5 trillion in assets under management.
BNY Mellon is a leader in alternative investments services both globally and in Ireland, along with State Street, JP Morgan and Citi. The company, which was formed four years ago in a merger between The Bank of New York and Mellon Bank, has strong ties to Ireland – Thomas Mellon, the founder of Mellon Bank, was originally from Omagh, Co. Tyrone – and is equally rooted in American history: Bank of New York, the oldest bank in the United States, was founded in 1784 by Alexander Hamilton. Both Mellon and Hamilton went on to be U.S. Secretary of the Treasury in their respective times.
Over the past fifteen years, the company has had an increasingly strong presence in Ireland. Today it has more than 1,800 employees in Ireland, working in corporate trust, clearing, investment servicing, and alternative investment services. Through its clearing arm, Pershing LLC, BNY Mellon is also a member of the Irish Stock Exchange and is an Irish regulated bank.
In BNY Mellon’s alternative investments branch, 550 of 1,600 global staff members are based in Ireland. Ruane describes the work done in Ireland as “a vital and growing part of our global footprint.” Ireland is not, he emphasizes, “a back office operation. It is an important business location in delivering the whole company to institutional clients. We have a strong country executive and management team, and extremely skilled employees. This is a big part of the success.”
Sitting in his office in the iconic One Wall Street building, Ruane explains his role and where he thinks the future lies for Ireland and his industry.
What are your views on the current state of the Irish economy?
My personal view is that many of the right building blocks are in place for economic recovery. The question is one of time. There are three big issues the economy is facing. One, unemployment levels are too high. Two, there is a need to re-capitalize the banking system. And three, the budget deficit.
All three of these issues are being addressed by the Irish government and its business leaders. In the funds services industry Ireland is experiencing a period of growth in employment levels and increased market share in the hedge fund industry. The Irish funds industry benefits from a highly regarded regulatory environment and a reputation for high quality staff and service levels.
These days, when most people think of Ireland, strength in the financial industry isn’t necessarily the first thing that comes to mind. Do you believe that is changing?
I think that in the fund services industry it is generally acknowledged that Ireland is quite strong.
BNY Mellon has been in Ireland for 15 years. We started off initially with a handful of staff and it has grown in line with our international business. So from our perspective we see it as a strong location to do business in Europe, an excellent place to recruit talented employees, supported by a good regulatory framework, and an equitable tax environment.
What are your responsibilities as CEO of BNY Mellon Alternative and Broker-Dealer Services?
I am fortunate to have responsibility for leading two businesses: alternative investment services, which was a start-up group seven years ago and is now one of our fastest growing investment servicing businesses, with $450 billion in assets under administration, and broker dealer services, one of our most well-established and well-regarded businesses. With broker dealer services, we provide government securities clearance and tri-party collateral management services to financial institutions and investors, facilitating financing transactions between investors and investment banks. This group manages $1.8 trillion in collateral daily.
With alternative investment services, we provide hedge fund administration, custody and banking services to hedge funds, private equity firms and their investors.
Both businesses place us at the center of the world’s capital markets, both in terms of how capital is being invested and how it gets accounted for.
What sort of growth has your industry, the alternative investment industry, experienced recently?
It is an industry that is continually evolving and growing. Alternative investment services initially began servicing hedge funds about seven years ago and has grown steadily, first in the U.S., then in Europe and more recently in Asia and Latin America, in particular Brazil…The core of our offering is accounting and independent verification of private equity and hedge funds, and it is this independent administration which, in my view, has helped make investors comfortable with investing in the alternative asset class. The alternative investment industry currently has in excess of $2.5 trillion assets under management and has been in existence for more than 30 years. The last few years post-credit-crisis have been characterized by the institutionalization of the industry, with some of the larger investment inflows coming from insurance companies, endowments, foundations and pension funds around the world, searching for investment return in a lower interest rate environment.
How has that growth been seen in Ireland?
With the growth of the alternatives industry, Ireland as a fund servicing center, together with Luxembourg, has become a major servicer of alternative asset managers based in Europe. BNY Mellon and other financial institutions have a significant presence in Ireland and Luxembourg. The Irish funds services industry, together with Ireland’s many fine universities and business schools, has done a great job of training people to accommodate this growth. Today, it is estimated that in excess of 40% of the world’s hedge funds are serviced in Ireland by close to 4,000 professionals.
How would you describe the way the funds industry has changed in Ireland in the years since the credit crisis? Where do we go from here?
There are a few things to consider. First, it’s important to remember that within the financial services industry and the area of funds services, Ireland is well-respected for its regulatory environment, and the financial crisis reinforced this view. For example, in 2008 many of the fund structures that got into difficulty were serviced in Ireland. They were resolved appropriately through the regulatory and legal framework, and investors found that reassuring and positive. Since that time there has been greater demand from investors for someone to independently verify the books and records and custody the underlying securities and cash. It has actually become central to how investment takes place. In my opinion, the trend toward third party hedge fund administration is essential to raising institutional capital.
And are you that third party?
Yes we are. The core business of our administration service is to provide third-party verification and reporting of the net asset value to investors and the manager. At the end of the financial year a fund’s audit firm does an audit. That combination – the services we provide the fund throughout the year plus the audit at the end of the year – have become central to how the industry is growing. It is a much more transparent environment than before the financial crisis.
You had a particularly good year in 2010; your percentages were way up. Do you see that as a sort of barometer for the future? Can you maintain that level of growth?
Firstly, BNY Mellon benefited post-credit-crisis from our strong financial standing. The ideal relationship for an institutional investor is to be able to hire an asset manager that can meet their return objectives, and to have their assets held and accounted for at a strong institution. That is what we do as an alternative investment services provider. We are that financial partner holding and accounting for assets through our custodial and administrative services capabilities.
In addition, last year the company acquired PNC’s well-regarded global investment services business, which added to our service offering. I think the combination of that acquisition with the business that we had been building over the last six years really catapulted us. Particularly in Europe.
There is also the macro trend that the alternative investment business is growing globally and I do think this trend is set to continue. I would attribute our specific growth to strong client service, product innovation and the quality of our staff.
How much time are you spending in Ireland?
I am there fairly often – at least once a quarter – as part of my need to travel to the key locations around the world where we have clients or staff, or both. I am in Europe every five to six weeks. Today I am probably spending more time in France, in Germany, in London, and Asia with clients and other key partners.
Do you think that growing up in both the U.S.and Ireland provided you with any special insight?
Yes. If I look at what I am most interested in, I do think it comes back to the culture. I am very interested in current affairs. In most families there is just a lot of discussion around news…So I was always interested in current affairs. And the other thing is that I have always been interested in history and geography. I think some of that is just coming from an island – you tend to be interested in what is going on in the world. And I am obviously very accustomed to both cultures, which makes it easy. I think the American and the Irish cultural experience, particularly if you have family in both places, is very comfortable.
What brought you back to America in 1989?
My thought when I finished up school and qualified [as an accountant] was that I would work in London or New York in international services. It was always in the back of my mind and because I was from the U.S., it was natural to return. At the time I didn’t think that I would stay in New York as long as I did, but then I wouldn’t be the first that would say that.
What’s interesting is, there used to be a macroeconomic research journal called “The View From One Wall,” and as a young person I used to get that from a family friend. It is a coincidence that I ended up working in One Wall [Street].
What is the best career advice you were ever given?
Do what you love or what you enjoy. But if you can’t do what you love, then do what you can and create your own opportunity. Particularly for young graduates today, it is not that easy to get exactly what you want starting out.
What advice would you give to young people just starting out?
The number one thing is to be positive. It is difficult to be a new graduate, but there are places in the world where there are opportunities. I am always struck by the people who will open their mind to starting their careers in places such as Brazil or China. There is enough information about where industry is booming. There is also recognition that every student is in the same boat, so in many ways it is really understandable that people are finding it hard to get positions. I think I would probably go where the opportunity is.
Thank you, Brian Ruane.