The 2007 merger that created Bank of New York Mellon, the custody bank, failed to deliver higher profits as the company lags behind its biggest rivals, according to Mike Mayo, an analyst at CLSA.
'The end result has not panned out as well as peers, or would have been expected for a company that says it achieved synergies from its 2007 merger,' Mayo, who covers banks at CLSA in New York, wrote today in a note to clients.
Bloomberg reports that Bank of New York bought Mellon Financial in 2007, promising 'cost savings and revenue synergies opportunities,' Robert Kelly, former chief executive officer of the combined firm, said at the time. BNY Mellon has come under pressure after rival State Street responded more aggressively to the threat from record low interest rates with investments in technology and job cuts that improved its profitability. Kelly was replaced by CEO Gerald Hassell in 2011.
Mayo said Hassell has been paid above the average bank CEO despite the fact that shares have lagged behind those of its peers for the past three years. Mayo, who rates the shares 'underperform,' also questioned why the bank had named no new board members in 10 years.
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image: © Matthew Hine