Mellon Financial Corp. is putting renewed energy into finding acquisition candidates to build on its mutual fund, private client, and processing businesses.

In meetings Monday in New York, chairman and chief executive officer Martin G. McGuinn said the Pittsburgh company was almost finished with a "repositioning" it began in January 1999, when it put low-profit businesses such as credit cards and mortgages on the auction block and put more resources into retail mutual funds, pension funds, and other fee-based businesses.

Last month Mellon agreed to sell its consumer and small-business banking operations to Citizens Financial Group, a Providence, R.I., unit of Royal Bank of Scotland, for $2.1 billion.

Those businesses gone, Mellon will now focus even more on expanding a collection of investment management and processing businesses it has been building by acquisition and other means since the early 1990s. "We are increasing our attention on acquisition activities," Mr. McGuinn said in an interview. "We clearly have the financial and human resources capacity to take on additional partners."

Mellon is also wrapping up a review of its ongoing businesses that it began this spring with an eye toward trimming fat and finding more ways to increase revenues. That project, known internally as LEAP (lift earnings and performance), will result in "several hundreds of millions" in yearly savings, Mr. McGuinn said.

He portrayed the changes a gradual transformation designed to get Mellon in fighting condition. Speaking with analysts, he said the deal with Citizens "was not a radical restructuring, but the next logical step. An acquisition could come along any day. We want to be ready."

Analysts said that Mellon, which expects gains of about $900 million from the sale of the retail operations, would most likely target boutique firms catering to private clients, global custody operations, and equity mutual fund managers.

Though Mellon has been steadily buying small firms, executives would not rule out a big acquisition, and analysts indicated it may be ready to take one on.

"Management believes it can add considerable distribution clout in potential smaller transactions," Judah Kraushaar, an analyst at Merrill Lynch & Co., wrote in a research note Tuesday. "The recent divestiture may also ultimately give [Mellon] more financial flexibility to pursue larger stock swaps."

Analysts have keyed on what Mellon might do to build its fund business. The company’s asset management unit, Dreyfus Corp., manages mostly fixed-income and money funds, but 30% of its portfolio is equity funds. The company said it wants to raise that contribution to 50% in two to three years.

An acquisition might be needed to do that. "We would look at an acquisition as a way to enter [a new market] but more likely as a way to get critical mass more quickly," Dreyfus chairman Stephen Canter said during the meeting with analysts Monday.

A number of equity managers could fit that bill, analysts said. One is Scudder Stevens & Clark, a fund firm acquired by Zurich Financial Services Group in 1997 that may be on the block. Zurich said in April that it had retained investment banks to "explore strategic options" for the firm, Zurich Scudder. A spokeswoman declined to comment.

Lori Appelbaum, an analyst at Goldman Sachs Group, said Mellon could afford an acquisition in the range of $1 billion to $5 billion.

A spokesman for Mellon declined to comment. Mr. McGuinn did not indicate in the interview whether a deal was imminent but said that "lots of investment banks are calling on us" and that the company is actively looking.

All the change comes on the heels of the departure in May of Christopher M. "Kip" Condron, the former head of Dreyfus. Mr. Condron is credited with helping transform the company from a traditional regional bank to one heavily dependent on asset management and fiduciary services for revenues and profits.

The meetings on Monday, for Wall Street analysts, investors, and the media, were meant to showcase the three individuals who have been elevated to Mellon’s executive management group since Mr. Condron’s departure — Mr. Canter; Ronald P. O’Hanley, the president of institutional asset management; and David F. Lamere, the chairman of Mellon New England and the president of the company’s private asset management group.

Mr. McGuinn has been trying to convince Wall Street that Mellon is on a better path now that it is free of low-performing businesses. Fee revenues at the end of the second quarter made up 85% of the company’s revenues, up from 52% in 1995. And trust fees made up most of that — 67% of total revenues, up from 28% in 1995.

Mr. McGuinn pointed to Mellon’s evolving business mix as a reason to be optimistic. Fifty-three percent of profits last year (adjusted to exclude retail operations) came from asset management, while 47% came from processing and corporate banking activities. That is enough, he argued, to put the company in the same league as heavyweights Northern Trust Co., State Street Corp., and Bank of New York Co.

Yet Mellon has not been able to translate that into the higher multiples commanded by those other so-called trust banks. Its price-to-earnings ratio hovers at just under 20, while Northern Trust and State Street get 27 and 26, respectively, and Bank of New York gets about 20.

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