DBRS Confirms The Bank of New York Co., Inc. – Senior at AA (low)

Dominion Bond Rating Service (“DBRS”) has today confirmed the ratings of The Bank of New York Company, Inc. (“Bank of New York” or the “Company”) as indicated above. The trends for all ratings are Stable.

The rating action follows the announcement by Bank of New York and JPMorgan Chase & Co. (“JPMorgan”) of their intent to enter into a transaction involving the sale of the Company’s retail and regional middle market businesses to JPMorgan for US$3.1 billion with a premium of US$2.3 billion. Simultaneously, JPMorgan will sell its corporate trust business to Bank of New York for US$2.8 billion with a premium of US$2.15 billion. The difference in premiums will result in a net cash payment of
US$150 million to Bank of New York. In addition, the Company is subject to a contingent payment of up to US$50 million from JPMorgan, tied to customer retention. The proposed transaction is subject to various regulatory approvals and is expected to close by the end of the third quarter in 2006.

DBRS believes that the transaction will result in better strategic allocation of the Company’s capital and resources, lower its risk profile, and improve its future earnings prospects. However, given Bank of New York’s already high ratings, DBRS does not consider the potential benefits of the transaction to warrant positive rating consideration at this time.

Bank of New York is selling a retail franchise that has traditionally produced stable earnings and a large low-cost core deposit base. At the same time the Company is strengthening its already powerful global securities business through the acquisition. The approximately US$15 billion each in loans and deposits to be sold to JPMorgan will be replaced by comparable amounts of corporate trust assets and equally stable deposits arising from the trust business. Importantly, the Company can forego the expenses it would have to incur to upgrade its low growth retail franchise to match those of its prime competitors, while boosting its market position and gaining further geographic diversification in its core corporate trust business.

Bank of New York’s earnings will likely decline in the short to intermediate term to reflect the costs associated with the sale of the retail assets and the integration of the acquired trust business. In addition, the Company’s tangible common equity ratios will suffer because of the goodwill related to the purchase. However, DBRS expects earnings to increase following the integration process, and tangible common equity ratios to be restored from earnings retention within a reasonable period.
Headquartered in New York City, The Bank of New York Company, Inc. is a global leader in providing securities, servicing, treasury management, investment management, and banking services. Customer relationships of the Company, located in 100 markets worldwide, include financial institutions, corporations, government entities, endowments, and foundations. At December 31, 2005, Bank of New York reported US$102 billion in assets.