Suddenly CEO: Thomas Gibbons praised as right choice at BNY Mellon (for now)

Register now

After three decades at Bank of New York Mellon, Thomas Gibbons is getting his shot.

The $381.2 billion-asset trust bank turned the keys over to the company man — at least temporarily — at dawn Friday shortly after Wells Fargo said it would pluck away BNY Mellon Chairman and CEO Charles Scharf to lead its turnaround.

Making Gibbons, 62, the interim chief executive was a good move, according to analysts who follow the company. Granted, BNY Mellon had to act quickly, but in Gibbons it picked someone who has held several roles at the company, including a nine-year stint as chief financial officer. He knows the organization well enough to keep the company on track while the board searches for a permanent CEO — and some even suggested it should be Gibbons.

“He’s been CFO for a long time, he’s well respected in the investor community, and the segment he was running [most recently] was one of the better performing segments while he was running it,” Brian Kleinhanzl, managing director at Keefe, Bruyette and Woods, said of Gibbons. “He has a good strong knowledge of the company and what needs to be done near term, so I think that’s a positive.”

Gibbons, who goes by Todd, first joined BNY Mellon in 1986. He held a number of management positions in capital markets and also spent six years as chief risk policy officer before he became CFO. Most recently, Gibbons was vice chairman and CEO of clearing, markets and client management. In that role, he ran the bank’s Pershing clearing business, treasury services and commercial payment activities, credit services and other businesses.

BNY Mellon declined to make Gibbons available for an interview Friday, nor did it hold a conference call with the investment community.

Analysts were split on whether Gibbons would be the right choice as a permanent CEO but generally agreed that he is the right choice at least for now.

The company will certainly want to hire a search firm and look outside the organization, regardless of who it ends up choosing, Kleinhanzl said.

“I think Todd would make a good CEO,” said Gerard Cassidy, an analyst at RBC Capital Markets. “He’s been at the bank a number of years. He knows the business. He was a very effective CFO. He knows the customers, he knows the senior management team, so there won’t be any surprises or unknowns if he’s appointed as the CEO.”

Others said the company might want to choose a younger candidate or one with more strategic experience.

“I think [Gibbons] was just kind of the obvious pick,” said Rajiv Bhatia, an analyst at Morningstar. “The question is, do you read any negativity into BNY Mellon [from Scharf’s departure] and that’s kind of hard to say.”

As CEO, Scharf focused on streamlining operations, trimming expenses and investing in technology. Yet, he struggled to turn a consistent profit in a tough environment for trust banks.

In the second quarter this year, the company’s net income fell 8% to $1.02 billion from the year-earlier quarter, as bond markets and interest rates weighed on its results.

“Strategically, BNY Mellon is much more challenged than [Wells Fargo], and I believe Charlie had figured that out,” Marty Mosby, an analyst at Vining Sparks, said in an email. He added that Boston-based State Street’s investments in cloud computing and its Charles River acquisition allowed it to leapfrog BNY Mellon in an already competitive business.

Scharf’s departure creates some near-term uncertainty for the New York-based bank, analysts said. Its stock price reflected that, falling as much as 5% at mid-day Friday; shares improved slightly later, to $44.70 in late-day trading, a 4% decline from a day earlier. Yet analysts also said that if anybody is in a good position to keep BNY Mellon on track while the board searches for a new CEO, it is Gibbons.

“The stock being down 5% so far seems like a bit of an overreaction to me,” said Jeff Harte, a principal at Sandler O’Neill. “You have to call it a bit of a black eye that Charlie only stayed for two years, but when you step back, the strategy they have in place is the right strategy.”

For reprint and licensing requests for this article, click here.