November 2, 2021

A major financial institution says it is closing the doors on its $5.3bn-a-year mortgage servicing business, the latest in a series of moves by banks to close old and struggling operations.

The bank, which has been in a crisis since 2014, has been trying to refocus its operations to take advantage of a new, low interest rate environment in the US and other countries.

However, the bank has had to sell its mortgage servicing businesses to other banks, including the UK-based Royal Bank of Scotland, which is closing another of its main mortgage servicing units, the Royal Mortgage Bank.

The Bank of England has also been stepping up the pace of its efforts to sell mortgage servicing assets, including to US rivals, which are also struggling to pay down debt.

But now the Bank of New York Mellon has decided to take its own course and shut its financial centre in Chicago.

It is closing its New York City branch and all of its New Jersey and Delaware branches as well.

The closure is not due to any impending closure of the banking operation, which had been operating at a loss of about $6bn since 2014.

But the bank will not be able to pay off its debt to the US Federal Reserve and other lenders as a result of the decision, said John Sperling, a New York-based analyst at Capital Economics.

“There are a lot of people who have been very upset about the way things are going.

The bank is a very important institution in the American economy,” he said.

“There are some banks that have been in this business for many years, and there are some that are in trouble and there have been some that have had trouble.

But this is a bank that has been going for the long haul.”

A spokeswoman for the New York branch said the bank was closing because it was struggling with its debt service to the Federal Reserve, the Treasury and the US Treasury Bank.

The spokeswoman declined to say when the closure would take place.

Last week, the Federal Deposit Insurance Corporation announced it would be stepping up its efforts with other banks to refinance their mortgage servicing debt. 

The announcement followed a series by financial institutions, including Bank of America, Bank of Montreal and HSBC, to close their old mortgage servicing operations.

The banks said they had struggled to pay back their debt to creditors.

In a statement, the FED said it was closing its Philadelphia, Pennsylvania, and New York offices as it had to refloat $1.6bn in mortgage servicing loans.

“The FED’s mortgage servicing workforces have been operating in a challenging environment over the past year, and it has been hard for them to meet their obligations to creditors and the public,” the Feds statement said.

“We are continuing to work with our financial institution counterparties and our federal and state mortgage servicing partners to reflend these loan assets, and are actively monitoring the progress of their efforts.”

The New York Post reported last week that the bank had been trying unsuccessfully to reforge $300m of debt.

The US Federal Deposit insurance agency said in a statement that it had increased the number of loan refinancings it made to banks to more than $300bn in 2015 and 2016.