Today, Mellons $870 billion in investment assets and $4.2 trillion in custody assets rank it fourth and fifth globally in those respective businesses, but the firms 26 percent profit margin lags far behind the 33 percent industry average for money managers, according to investment bank Keefe, Bruyette & Woods. By 2005 that money-losing business had diluted profits from Mellons core asset management operations and failed to provide hoped-for cross-selling opportunities, prompting Mellon to sell it to Affiliated Computer Services. But even as companywide revenues climbed 34 percent during that period, expenses surged 40 percent and earnings per share grew only 25 percent, dragged down by Mellons $275 million purchase in 2002 of PricewaterhouseCoopers human resources consulting unit. From 2002 through 2005 assets under management expanded by 38 percent, to $781 billion, and assets in the custody division, which processes executed transactions for other institutions, soared by 77 percent, to $3.9 trillion. The result: McGuinns revamped firm grew respectably but didnt generate profits fast enough to satisfy investors. And he picked a bad time to get out of banking completely: He sold Mellons retail banking operations to Citizens Financial Group in July 2001, just as millions of bubble-weary individual investors were beating a retreat from the stock market to the relative safety of bank accounts.
#BOB THE BUILDER SERIES#
and Dreyfus Corp., after suffering the fallout from a series of bad corporate loans McGuinn, however, pursued scale at the expense of profit, relying on lavish spending and price-cutting to gain market share. In the early 1990s the firm had begun to gobble up money managers, including Boston Co. McGuinn a 25-year veteran of the firm who retired earlier than expected at age 63 played a key role in Mellons long transition from banking to the more-profitable, faster-growing asset management and custody businesses.
#BOB THE BUILDER HOW TO#
Now, amid ongoing efforts to mend relations with investors and Wall Street, Kelly faces a much bigger challenge: how to improve Mellons profitability without repeating the mistakes of his predecessor.
The companys stock price was drooping, and shareholders were rebelling. Before Kellys arrival, Mellon had endured what critics describe as a series of strategic and tactical blunders under Martin McGuinn, who became CEO in 1999.
#BOB THE BUILDER TV#
The big TV screens serve as a much-needed reminder. ∻ut I want to remind people what were about here. after a five-year stint as finance chief to run Mellon. ∽ont get me wrong I love art, says the 51-year-old Canadian, who left Wachovia Corp.
Then he ordered that the painting be taken down and replaced with two sprawling plasma television screens tuned to CNBC and to CNNs Headline News. On February 13, his first day as chairman, president and CEO, Kelly paused outside the executive suite at the firms Pittsburgh headquarters to admire a luminous seascape by 19th-century American artist William Stanley Haseltine. It took all of five minutes for Robert Kelly to make his mark on Mellon Financial Corp.