Nelson Peltz’s Trian Partners is rebuffing a request by fellow activist Marcato Asset Management to remove Bank of New York Mellon (BK) Chief Executive Gerald Hassell from his job, the FOX Business Network has learned.
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Trian Partners, which owns a 2.7% stake in BNY Mellon, “is not interested” in replacing Hassell, who has come under fire from Marcato’s Founder Mick McGuire in recent days for not moving fast enough to improve the bank’s financial performance, people with direct knowledge of Trian’s thinking tell FOX Business. Marcato owns a 1.6% stake in BNY Mellon, the fund disclosed several months ago, but more recently, the investment company has reached out to large investors including Trian to try and galvanize shareholder support for Hassell’s removal, these people say.
Trian, these people add, is against the move.
“Nelson and Trian believe replacing the CEO would be the dumbest thing they could do,” a person with direct knowledge of the matter said. “That would really alienate the board and management from doing what Nelson thinks they need to do.”
In November, BNY Mellon announced that it had given a board seat to Trian founding partner Edward Garden who began to prod the bank’s board to improve profits margins, which have lagged competitors in recent years. Trian is looking to engage BNY Mellon in what people inside the fund call “constructive conflict” to reduce costs and possibly make other changes.
One idea under consideration by Trian is a spin-off of BNY Mellon’s slower growth “custody business” and to keep its more profitable asset management subsidiary, according to people with direct knowledge of the matter. FOX Business first reported the spin off discussion in November of last year.
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With $23 trillion under custody, BNY Mellon is the financial industry’s largest “custodian bank,” where it safeguards and keeps records for large institutional investors. But BNY Mellon also has $1.5 trillion in assets under management making it the seventh-largest asset management outfit behind more well-known ones such as Blackrock (BLK) and JP Morgan (JPM).
Likely buyers of the custody business would be State Street Corp. and JP Morgan, according to bankers with knowledge of the matter. It’s unclear where such a radical restructuring fits within Trian’s thinking at this time, but people with knowledge of the matter say the sale of the custody unit remains an option in part because it would give BNY Mellon currency to make smaller acquisitions particularly in the asset management business.
But the thinking inside Trian is that current management including Hassell can remain at the bank no matter what change might take place, according to people with direct knowledge of the matter.
A Trian spokeswoman declined to comment on the matter other than to refer to a statement from Graden, who said, “I am encouraged by the Board’s reaction to our ideas and management’s sense of urgency in achieving significant operating improvement.”
A BNY Mellon spokesman said in a statement: “We welcome input from all of our shareholders. Under Gerald Hassell's leadership, BNY Mellon has continued to increase shareholder value, reduce costs, improve margins and streamline the organization, which our results clearly demonstrate.”
A Marcato spokesman declined to comment.
Peltz is considered one of the premier activist investors who prod management to make changes designed to increase share price. But unlike other activists such as Dan Loeb or Carl Icahn, Peltz has been loathed to demand major management changes as part of his activism. One exception came in 2012, when Peltz forced the resignation of Legg Mason’s Chairman and Chief Executive Mark Fetting. Peltz left the Legg Mason board last year, but Trian still owns a significant stake in the company.