The Bank of New York Mellon Corp., the world’s largest custodian bank, said late Wednesday said that Robert Kelly stepped down as chairman and chief executive officer due to differences with the bank’s directors over his management.

Gerald Hassell, president and board member, has been named as Kelly’s immediate successor. Hassell, 59, had been with the former Bank of New York for more than three decades while Kelly led the new BNY Mellon since 2007. Hassell joined as a management trainee in 1973.

Kelly served as chief executive officer of Mellon Financial Corp. prior to the merger of Bank of New York and Mellon Financial that year, which vaulted the bank past JP Morgan Chase as the world's largest custodian. BNY Mellon had $26.3 trillion in assets under custody and $1.3 trillion in assets under management at the end of June.

In a terse statement, BNY Mellon did not elaborate on Kelly’s resignation. “Gerald is ideally positioned to guide BNY Mellon through the next phase of its growth and to bring it to its full potential,” said Wesley van Schack, lead director of BNY Mellon.

During Kelly's tenure, BNY Mellon expanded through acquistions such as the purchase of PNC Financial Service Group's investment servicing business for $2.31 billion and Germany's BHF Asset Servicing GmbH for $363 million. However, the bank has also faced plenty of challenges.

On August 10, BNY Mellon said it planned to cut 1,500 jobs or 3% of its workforce.

The cuts came after the company posted record net income in its second quarter. But Kelly said that operating expenses had grown faster than revenue, necessitating the cuts. On a July conference call Kelly said that the bank would trim cost by moving people to cheaper locations, consolidating real estate holdings at cutting its procurement budget.

New York Attorney General Eric Schneiderman recently said that BNY Mellon violated state law when representing investors in mortgage securities created by Bank of America's Countrywide Financial unit. Schneiderman said that BNY Mellon should pay penalties and restitution to investors.

BNY Mellon, like other custodian banks, has also been the target of lawsuits from pension plans accusing it of executing foreign exchange transactions at inflated prices. The bank has denied wrongdoing in all of the cases.   

The price of BNY Mellon’s shares, traded on the New York Stock Exchange, has declined about 32% so far this year, according to Bloomberg. The price per share went down about 3% on Wednesday to close at $20.67.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.