Robert Kelly, CEO of Bank of New York Mellon Corp., unexpectedly resigned on Wednesday over differences with the company's board of directors, the New York-based bank said. The bank's president, Gerald Hassell, was promoted to CEO.

Kelly was hired as CEO of Mellon Financial Corp. in February 2006, months before Mellon surprised Pittsburghers with an announcement that it was merging with Bank of New York Corp. and moving its headquarters to New York.

At the time, Kelly told the Tribune-Review, "I came to Pittsburgh to grow the company, not to sell it."

Kelly's departure doesn't change BNY Mellon's view of Pittsburgh, spokesman Jeep Bryant said. Nor does it alter the bank's commitment to continue growing jobs here. The bank has 7,700 workers in the Pittsburgh area.

"The board is unanimous in its support for Pittsburgh," Bryant said.

BNY Mellon characterized the split with Kelly as a "mutual agreement with the board of directors due to differences in approach to managing the company." Bryant declined to elaborate on their differences.

Before taking over as CEO of Mellon Financial, Kelly had been chief financial officer of Wachovia Corp., which was since acquired by Wells Fargo & Co.

Under Kelly, BNY Mellon's operating strategy was not working well, said Richard Bove, a veteran bank analyst with Rochdale Securities in Stamford, Conn.

"It's my impression (Kelly) was fired," Bove said. "When a company says a CEO has left by mutual agreement, that says nobody was making the case to keep him."

Perhaps the biggest criticism of BNY Mellon under Kelly was that the bank's balance sheet was "underutilized," Bove said.

"Sixty-two percent of their assets are in cash and securities, and that cash is earning virtually nothing," said Bove. "I think the board believed that the balance sheet wasn't generating the kinds of returns it should have generated."

BNY Mellon's "bundled" approach to pricing its products and services essentially meant "they give away some product for next to nothing," the analyst said.

Bove said he viewed Hassell as a permanent -- rather than an interim -- CEO, and that he would be in the job for about six years, or until age 65. Bryant also said Hassell's elevation to CEO was for the long term.

Separately, Bove criticized the shifting of some employees from New York to other BNY Mellon centers, such as Pittsburgh, because the government in Albany might have offered tax breaks to the company for keeping the jobs in New York if Kelly had sought them.

Shares of BNY Mellon's stock closed yesterday at $20.67, down 15 cents. The announcement of Kelly's resignation was made after markets closed. On Aug. 22, the bank's shares hit a 52-week low of $18.77.

Kelly's resignation follows news last month that BNY Mellon plans to cut 1,500 jobs, or about 3 percent of its global workforce, in an effort to rein in rising operating costs. Pittsburgh could be spared from those cuts, analysts said, because it is considered by BNY Mellon to be one of its "growth centers."

While BNY Mellon was able to increase net income 12 percent in the second quarter, Kelly told analysts that the bank's operating expenses had jumped more than 21 percent and needed to be cut.

The bank also has faced criticism and legal action because of the handling of state pension funds. Virginia, Florida and Pennsylvania have sued BNY Mellon, seeking millions in damages and penalties for what the states say was overcharging of their pension funds by the bank for foreign-currency transactions. Massachusetts also has accused the bank of overcharging on those transactions. BNY Mellon has denied that it did anything improper.

Details of Kelly's severance package are expected to be made public, Bryant said, but weren't available yesterday.

Hassell started at Bank of New York more than 30 years ago, BNY Mellon said. He was named president of the bank in 1998, a title he retained after the Mellon Financial merger.

The bank's lead director, former Duquesne Light CEO Wesley von Schack, praised Hassell's experience.

"Gerald is ideally positioned to guide BNY Mellon through the next phase of its growth and to bring it to its full potential," von Schack said.

BNY Mellon is the world's largest custody bank, with about $26.3 trillion in assets under administration, as well as $1.3 trillion in assets under management.

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