Bank of NY Settlement Brings Out Bulls

NEW YORK (TheStreet) -- Sentiment has become more bullish on Bank of New York Mellon (BK Quote) in recent days due to expectations that the resolution of a longstanding legal headache is in the offing.

While the widely expected settlement may already priced into the stock, there are signs the New York-based trust bank and its competitors -- which haven't enjoy the same sharp rise as more consumer- and investment-oriented banks during the market's recent run-up -- may soon gain ground.

Bank of New York has been entangled in a money laundering scandal with Russia since the 1990s, when a company vice president was accused of using bank accounts as a conduit to siphon away more than $7 billion. Two years ago, the country's customs service resurrected the case, asserting that Bank of New York owed the Russian government $22.5 billion in taxes.

On Wednesday, Russian Finance Minister Alexei Kudrin said his government was close to reaching a settlement with the bank. Similar reports circulated in the media in preceding days, though Bank of New York has yet to make an official statement.

The bank may still pay at least $14 million for Russia's legal costs, according to Kudrin. That figure would be in line with a settlement reached with the United States government years ago.

The $14 million penalty is nominal when compared with what Russia had been seeking, and lower than estimates that had circulated in recent months. (One analyst was expecting a settlement of $25 million.)