ONE OF Ireland's largest funds servicing companies, BNY Mellon Securities Services (Ireland) Ltd, defied the crunch to increase its revenues by 23 per cent during 2007.

According to annual accounts filed with the Companies Registration Office, BNY Mellon grew its turnover to $111.2 million (€75.8 million) in the year to December 31st, 2007, up from $90.2 million in 2006.

The company was formed in 2007 when the Bank of New York merged with Mellon Financial Corporation. However, as the merger was only finalised in Ireland during 2008, the accounts only reflect BNY's Irish business, which up until 2006 was part of a joint venture with AIB. Mellon's Irish funds business reported a 25 per cent increase in turnover in 2007, up to €28.2 million.

Harley Murphy, head of BNY Mellon Asset Servicing's EMEA offshore business, said that while the credit crunch had an impact on business on the traditional equity and bond side, leading to substantial falls in asset values, BNY Mellon benefited from the flight in capital to money market funds. The firm is one of the largest players in this market and is also a major player in exchange-traded funds (ETFs), which also grew during 2007.

However, profits before tax at the firm fell by almost one-third in 2007, declining by 27.6 per cent, or by $5.3 million, to $13.9 million. While this decline was in part due to a longer reporting period of 14 months in 2006, as well as the inclusion of a once-off payment that year, the firm also suffered from rising administrative expenses. These increased significantly during the period under review, up by $23.4 million to $98.9 million. Mr Murphy said a factor in this rise was the weakening of the dollar.

Other factors included costs of the firm's establishment of a Cork operation, which now employs 270 people, and the recruitment of 174 staff members during 2007.

Mr Murphy expects BNY Mellon to post revenue growth again in 2008: "The market is tough, but we are still seeing demand from clients, particularly those looking to outsource back-office functions on a partial basis."

The firm is benefiting from the economic slowdown in Ireland which is reducing high levels of staff turnover, with Mr Murphy noting a marked change in turnover rates in the last three months. This year he expects employment to rise by about 150-200 across BNY Mellon's Irish operations, which employ some 1,200.