(Reuters) -Northern Trust's shares rose 5% in premarket trading on Monday after a Wall Street Journal report said Bank of New York Mellon Corp had approached the asset and wealth manager recently to express interest in a merger with its smaller rival.

A potential deal between BNY, the world's largest custodian bank, and Northern Trust would reshape the asset servicing and wealth management industry by combining two of the sector's biggest players.

The chief executives of BNY and Northern Trust had at least one conversation, but no offer was discussed, the newspaper reported on Sunday, citing people familiar with the matter.

BNY may approach Northern Trust in the future with a formal bid, however it may not result in a transaction, the report added.

Bank of New York Mellon declined to comment, while Northern Trust did not respond to Reuters request for comment outside regular business hours.

"Any deal would have to clear antitrust hurdles," Rajiv Bhatia, analyst at Morningstar said, adding that State Street, JPMorgan and Citigroup are still major custody competitors.

"The Trump administration has seemed to take a light regulatory approach to banks and note the $35 billion takeover of Discover by Capital One was approved."

Bank dealmaking is widely expected to pick up in the second half of 2025, as easing regulatory uncertainty and stabilizing interest rates revive boardroom appetite for consolidation.

BNY had a market cap of $65.55 billion while Northern Trust has a market cap of $21.76 billion, through previous close, according to LSEG.

Both BNY and Northern Trust offer a broad suite of services that involve holding, managing and transferring money on behalf of corporations, investment firms and financial advisers.

BNY Mellon shares were flat in premarket trading. The stock has risen about 19% so far this year.

Northern Trust rose 5.4% to $117.85, building on its 9% gain for the year through the prior close.

(Reporting by Pretish M J and Manya Saini in Bengaluru; Editing by Lisa Shumaker, Diane Craft and Shailesh Kuber)

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