Robert Kelly, one of the most prominent Canadians in global banking, has walked away from his job as chief executive officer of Bank of New York Mellon , which cited differences in opinion about how the bank should be managed.
In a sign of how hastily the decision appears to have been made, BNY Mellon issued a statement late Wednesday that its president Gerald Hassel, a board member since 1998, would be stepping in immediately to serve as the new CEO.
Mr. Kelly, 57, a former top executive at Toronto-Dominion Bank, left BNY Mellon “by mutual agreement with the board of directors,” the bank said in a statement. The move was the result of “differences in approach to managing the company.”
“We are grateful to Bob Kelly for his leadership and the contributions he made to the company during his tenure as CEO,” the bank said, noting Mr. Kelly’s key role in overseeing the integration of Bank of New York and Mellon Financial after their $16.5-billion (U.S.) merger in 2007. “Bob Kelly is a person of the highest integrity and we wish him the best in his future pursuits.”
Though the exact reasons for the discord were not made public, BNY Mellon had run into challenges in recent months, forcing it to slash costs.
On Aug. 10, the bank announced it was cutting 3 per cent of its work force – about 1,500 jobs – and implementing a hiring freeze across most of its operations to deal with rising expenses. At the time, Mr. Kelly said expenses were growing “unsustainably faster” than revenue in the weak U.S. economy.
Non-interest expenses rose 22 per cent in the second quarter compared with a year earlier, and Mr. Kelly said the bank planned to consolidate real estate holdings and move offices to less expensive markets to trim costs. Under Mr. Kelly’s watch, BNY Mellon had already shifted staff and operations to less-expensive markets such as Pittsburgh, Manchester, England, and India.
Mr. Kelly, a Halifax native, was one of the higher-paid banking executives in the United States. A report this week from the Institute of Policy Studies, a liberal think tank based in Washington, D.C., listed him as one of 25 CEOs who earned more in 2010 than their banks paid the government in corporate taxes.
BNY Mellon paid Mr. Kelly $19.4-million last year, said the report, while the bank itself received a tax refund of about $670-million. As CEO, he had spoken out about high corporate tax rates in the United States.
Mr. Kelly is well known in Canadian banking, having served in several senior positions at TD starting in the early 1980s, including vice-chairman. He departed in late 2000, more than a year before Ed Clark was named head of Canada’s second-largest bank in 2002. Mr. Kelly had been considered a potential candidate for the CEO job.
After a five-year stint as chief financial officer at Wachovia Corp., he joined Mellon Bank as CEO in early 2006, and later became head of the merged BNY Mellon. He was once seen as a candidate for the CEO role at Bank of America, according to reports.
After his appointment as CEO of BNY Mellon, the bank’s shares rose as high as $39.95 in late 2008, but have fallen over the past few years to less than $21, amid turmoil in the U.S. banking sector.
Mr. Kelly was also part of a small group of top U.S. bank CEOs who took part in emergency meetings with the U.S. Treasury Department and U.S. Federal Reserve Board in 2008, during the fall of Lehman Brothers. Those meetings helped to shape how the industry dealt with the fallout from the credit crisis.
“It has been an honour to serve BNY Mellon, its management team and its employees during the past four years,” Mr. Kelly said in the statement issued by the bank. “We have navigated tremendously difficult markets and built one of the world’s premier financial institutions.”
With files from Bloomberg News
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