In Surprise Move, BNY Mellon CEO Quits, Successor Named

(September 1, 2011) — Gerald L. Hassell has been appointed the new chairman and CEO of BNY Mellon, replacing Robert P. Kelly, who resigned “by mutual agreement with the board of directors.”

“It has been an honor to serve BNY Mellon, its management team and its employees during the past four years,” said Kelly. “We have navigated tremendously difficult markets and built one of the world’s premier financial institutions. I am confident that under Gerald’s leadership of the firm’s strong management team, BNY Mellon will continue to flourish going forward.”

A news release from the company — one of the largest trust and custody banks — cited “differences in approach to managing the company,” as the reason for Kelly’s departure. Hassell, BNY Mellon’s president and a longtime board member, has been with the firm and before that with Bank of New York for three decades.

“Over the course of his more than three-decade tenure with BNY Mellon and its predecessor company, The Bank of New York, Gerald has led nearly every major division of the company,” Wesley W. von Schack, lead director of BNY Mellon, stated in the news release.

Kelly’s departure comes just a few weeks after the firm said it will cut about 1,500 jobs, or 3% of its work force, due to growing costs — a move that followed a similar decision by its competitor, State Street.

BNY Mellon has also been the target of multiple accusations in recent months of having overcharged pension funds for foreign exchange trades by failing to charge the funds the rates that the bank paid. Instead, the firm is accused of forcing them to pay the highest rates of the day. In June, for example, Massachusetts State Treasurer Steven Grossman claimed that BNY Mellon overcharged the state’s Pension Reserves Investment Management (MassPRIM) more than $30 million on foreign exchange (FX) trading since 2000. The figure upwardly revised an original accusation of $20 million in overcharges announced at a June 13 press conference. The $50 billion pension fund had hired a consulting firm to review MassPRIM’s currency transactions after allegations surfaced that custody banks were actively overcharging public pension funds on their FX trades.

“Given our initial findings, we wanted to take as comprehensive a look as possible at past foreign currency exchanges done on our behalf,’’ Grossman, who is chairman of the state pension board, said in a statement. “It’s imperative that pension beneficiaries and taxpayers are treated fairly and that banks do not profit disproportionately at their expense.’’

MassPRIM allegedly uncovered the $10 million in additional overcharges by expanding their review of FX trading back until 2000. The initial $20 million in overcharges allegedly occurred from 2011 to 2007.