Jin Lee/Bloomberg NewsRobert P. Kelly, who stepped down as chairman and chief executive of Bank of New York Mellon. Gerald L. Hassell, below, is his successor.
Amanda Gordon/Bloomberg News
9:27 p.m. | Updated
Bank of New York Mellon’s chief executive and chairman, Robert P. Kelly, stepped down late Wednesday because of “differences in approaches to managing the company,” the bank said.
Pressure on the bank has been growing for months. While it has avoided the mortgage woes that have bedeviled the nation’s biggest financial institutions, it has come under scrutiny because of accusations that it and other custody banks shortchanged clients when executing currency trades for foreign transactions. In addition, Bank of New York’s performance has lagged that of its chief rival, State Street.
A spokesman for the bank said Mr. Kelly’s departure had nothing to do with the foreign-exchange lawsuits.
A person close to the board, who was not authorized to speak on the record, said that the decision was not rooted in the litigation or in any one particular issue. Rather, this person said, Mr. Kelly’s departure was the result of differences “in terms of management style.” Another person involved in the management shake-up, who was also not authorized to speak on the record, said the directors felt that Mr. Kelly was not as engaged in the day-to-day operations as they would have liked. Both people said that the rift between the board and Mr. Kelly had been brewing for some time.
Gerald L. Hassell, 59, the bank’s president and a board member since 1998, was appointed chairman and chief executive.
Bank of New York Mellon is not as well known as institutions like Bank of America or JPMorgan Chase, in part because it has no retail branches. But it is one of the world’s largest custodial banks and asset managers, with $26.3 trillion in assets under custody and administration and $1.3 trillion in assets under management. It was created in 2007 by the $16.5 billion merger of Bank of New York and Mellon Financial of Pittsburgh.
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Mr. Kelly, 57, had been a candidate to succeed Ken Lewis as chief executive of Bank of America. But his talks with the bank became public in 2009 and apparently broke down over compensation. At the time, some Wall Street insiders were surprised that Bank of New York’s board did not dismiss him once it became known that he was negotiating to leave.
In December 2009, Mr. Kelly sent a note to employees saying that while he had been approached by another bank, “I firmly concluded that my place is here at BNY Mellon.”
A native of Nova Scotia, Mr. Kelly worked at Toronto-Dominion Bank for years. He was considered a candidate to one day run the bank. In 2000, however, he took a job at First Union Corporation. It acquired Wachovia in 2001, and he became chief financial officer of the combined company, named Wachovia.
He left before Wachovia made what turned out to be the disastrous decision to buy Golden West Financial, a California lender that eventually dragged down the bank with mortgages that soured. He had moved to become chief executive of Mellon Financial in 2006 and when Mellon merged with Bank of New York in 2007, he got the top job.
As an executive, he tends to fly under the radar on Wall Street. But the bank, like its peers, has had some recent setbacks.
While Bank of New York did not have the same mortgage problems as other banks, it did accept $3 billion in taxpayer money during the financial crisis. Still, it was among the first banks to pay back the money.
More recently, the bank has come under scrutiny over how it priced currency trades for some clients, including many pension funds. Several state attorneys general have filed lawsuits against the bank, contending that it cheated pension funds by selecting improper prices when processing currency trades.
Jeep Bryant, a Bank of New York spokesman, said on Wednesday that the lawsuits were “completely without merit and we are defending against them vigorously.”
Mr. Kelly did not return a call seeking comment.
Shares of Bank of New York, like other financial stocks, have struggled in the last year. Yet since the beginning of the year, its shares have fallen 31 percent compared with a 23 percent decline in shares of State Street.
Alexander Blostein, a research analyst who covers Bank of New York Mellon for Goldman Sachs, said, “The announcement of Mr. Kelly’s resignation and its timing were unexpected, which introduces new uncertainty to the stock, in our view.”
“While the exact reasons behind Mr. Kelly’s departure are unclear,” Mr. Blostein said, “we believe the firm’s focus under the new leadership could shift to more aggressive cost management and business rationalization and away from acquisitions.”
Analysts say Bank of New York has underperformed State Street in part because its business is more sensitive to interest rates, and the current prolonged low interest rate environment has eaten into profits.
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