Now that Mellon Financial Corp. has sold its consumer banking business to Citizens Financial Corp., the Pittsburgh company can pay more attention to the goals Martin McGuinn set when he became the Pittsburgh company's chairman two years ago.

Under Mr. McGuinn, $520 billion-asset Mellon has evolved from a regional bank that merely offered asset management to a player in international wealth management. Now it is free to focus building its asset and wealth management businesses both domestically and abroad.

Denis LaPlante, an analyst with Fox-Pitt, Kelton Inc., said: "We should have seen this transformation coming when Mellon bought The Boston Co. in 1993 and Dreyfus in 1994. It's really been a blueprint on how a bank becomes an asset manager."

But before Mellon could divest itself of its retail banking and small-business operations, Mr. LaPlante said, it had to fortify its asset base.

Other banks, of course, have pushed into asset management and wealth management, but Mellon has pushed harder than, for instance, Bank of New York and Northern Trust, both of which have stuck to traditional banking.

Last week's sale to Citizens, a unit of Royal Bank of Scotland PLC, capped a two-year series of sales in which Mellon shed most of its mass-market operations - credit cards, mortgages, ATM processing, indirect auto lending, and now retail and small-business banking.

About a year into his chairmanship, in June 2000, Mr. McGuinn stated publicly that he intended to go after asset management firms for acquisitions and partnerships, and he wasted no time carrying out that plan.

That same month Mellon struck a deal with Optima Fund Management to offer hedge fund products to its private banking clients. Two months later it aligned with the Brazilian insurer Vera Cruz Via e Previdencia to offer defined-contribution pension funds in South America. In October 2000, Mellon agreed to buy the remaining 25% of Newton Management Ltd. of London. Mellon had bought a 75% stake in Newton in 1998 and has been using the company as its European asset management base.

Also in October 2000, Mellon bought $500 million-asset Trust Co. of Washington, a Seattle boutique that handled assets for high-net-worth individuals and charitable foundations.

By yearend, Vicary M. Graham, formerly the head Mellon's mortgage banking unit, was ensconced as head of Mellon Private Asset Management, and her chief responsibility was to expand the wealth management business in Florida and California.

As the asset/wealth management businesses sped up, other operations slowed down. In February of this year Mr. McGuinn said his company would be "clamping down on spending" to brace for a downturn in the economy. Savings would be invested in "more profitable" ventures, such as asset management, he said.

Mellon has made still more acquisitions this year, buying Standish, Ayer & Wood, a Boston-based bond manager, in April, and Van Deventer & Hoch, a Glendale, Calif., high-net-worth investment manager, last month.

Also in June, Mellon Global Investments formed a joint venture with Kuwait's Ahli United Bank, Mellon Ahli Asset Management Ltd., to offer services in the Middle East.

Most recently, Mellon Financial announced that in September it will open two new private asset management offices in Florida - one in West Palm Beach and one in Fort Lauderdale. Those will bring to nine the number of offices opened over the past 12 months.

Craig Sutherland, national director of client services for Mellon Private Asset Management, said the next areas targeted for growth in Florida are along the state's west coast - Naples, Sarasota, and Tampa Bay.

He also said that the Citizens deal will not lead to diminished service for Mellon's private banking customers.

Mr. Sutherland went on to say that the global expansion plan will follow the domestic model. Mellon Financial will seek more strategic partnerships like the one in Kuwait, and focus on countries and regions with a high concentration of wealth - particularly in Europe and Asia.

"We began in Florida, Washington, and Denver by buying an asset manager and building out from there," he said.

Gerard Cassidy, a banking analyst with Tucker Anthony Sutro Capital, said Mellon's shifting of focus away from traditional banking products is not necessarily right for all banks.

"You may see some smaller groups heading this way, but the entire industry is not about to hop out of tried-and-true banking," he said. "There may be money to be made in asset management, but there are risks" - such as a bear market.

"If the asset management business goes from 15% or 20% growth to 5% growth, no one - not customers and not banks - will be enthralled with the market anymore," Mr. Cassidy said.

But Mellon is committed, Mr. Sutherland said.

"Short-term volatility is not going to get us to take our eye off the ball," he said. "A soft pocket in the market will not make us change our strategy. We are an asset manager, and we are in it for the long haul."

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