What is the expected dilution effect on existing shareholders from the issuance of the depositary shares?

Dilution outlook

The under‑written public offering consists of 500,000 depositary shares (DS), each of which corresponds to 1/100 th of a preferred‑stock share. In other words, the total number of preferred‑stock interests being created is the equivalent of 5,000 full‑size preferred shares (500,000 ÷ 100). Because the DS trade on the NYSE as a separate security but represents a fractional claim on the same underlying preferred equity, the net claim on the preferred‑stock capital pool rises by roughly 5,000 shares.

From a dilution standpoint, the impact on existing preferred‑stock shareholders is modest. Assuming the current outstanding preferred‑stock base is on the order of a few hundred thousand shares—as is typical for a large financial‑services parent—adding 5,000 shares will increase the share count by well under 1 % (likely in the 0.2 %–0.5 % range). Existing holders will see a slight reduction in their absolute percentage ownership, but the economic rights attached to each share (e.g., dividend yield and liquidation priority) remain unchanged on a per‑share basis.

Trading implications

• Buy‑side opportunity: The dilution is small enough that the market should not penalise the stock heavily. If the proceeds are earmarked for incremental growth (e.g., expanding balance‑sheet capacity or funding strategic initiatives), the incremental capital could boost the company’s earnings trajectory, supporting a neutral‑to‑bullish bias on BNY’s equity.
• Watch the pricing spread: The offering price versus the secondary‑market DS price will signal whether investors view the dilution as purely cosmetic or as a gateway to higher‑return projects. A tight price premium (offering price above the prevailing DS level) suggests the market expects the capital raise to be value‑adding, making a long position in the NY‑listed common equity attractive.
• Risk management: Keep an eye on any shift in the preferred‑stock dividend yield and the company’s leverage ratios post‑issuance. If the capital raise materially improves the firm’s balance sheet, the downside risk from a marginal dilution is minimal, and any pull‑back in the common‑stock price could present a entry point for short‑term traders.