How BNY Mellon's new CEO Robin Vince hopes to revitalize Wall Street's sleeping giant

  • Robin Vince takes the reins as BNY Mellon’s third CEO in about as many years.
  • Investors are looking for signs that he will prioritize faster growth and increase revenues. 
  • Analysts told Insider key challenges will be boosting a flagging stock price and cutting costs.

On a call in April to discuss Bank of New York Mellon’s quarterly results, Wall Street analysts were eager to hear from the man of the hour: the incoming CEO, Robin Vince. 

“I feel like I’ve been prepared for this role over the course of my career,” Vince said.

He ran the money markets business at Goldman Sachs, where he spent the last two decades. Many of that unit’s clients also do business with BNY, Vince noted. He was CEO of the international bank as well as chief risk officer there.  

All told, “I think it really gives me the opportunity, having touched a lot of different aspects of our franchise and our activities, to really bring all of that to bear in the role,” he said.  

On Wednesday, Vince took the reins as CEO. For analysts, investors, and employees frustrated by a poorly performing stock  in an industry beset by plunging fees, his vision as the leader of the world’s largest custody bank will be tested. 

He wants to sell more of the firm’s services to its vast client base — some 90% of the world’s largest 100 banks and money managers — and emphasize BNY’s technology investments to make the firm more efficient.  

BNY shares are down 20% in five years, while a widely tracked bank index is up 13.7% over the same period. Most analysts, typically a bullish group, have neutral views of the stock. They want to see the bank, which makes most of its money from fees clients pay for custody and other investment services, expand wallet share with clients and cut costs.

Mike Mayo, the Wells Fargo bank analyst, said Vince’s “first mandate is to create a more cohesive firm,” where it can better communicate what the whole bank can offer customers.

“You have a refreshed board of directors, the fourth CEO in six years, and a company that struggles to grow revenues faster than expenses,” Mayo told Insider. “On the other hand, you have a global leader in terms of services to financial markets.”

Any new bank boss is watched closely. But after leadership changes and a stagnant stock price, the bar is high for Vince’s execution at a firm with historic roots on Wall Street. (Alexander Hamilton founded Bank of New York in 1784, and its stock was the first listed on the New York Stock Exchange). Vince will now steer the bank and its 50,800 employees at a difficult moment for the American economy and the money management industry.

Markets have whipsawed this year as interest rates rise and recession fears loom, weighing on businesses like BNY’s that are tightly linked to asset prices — it safeguards $43 trillion in assets and clears some $10 trillion of securities for clients daily. Firms are under pressure to deliver returns for lower fees, driving fund manager consolidation.

With market volatility weighing on asset prices, Argus Research analyst Stephen Biggar said Vince’s “battles are on the expense front, especially as revenue gains are harder to come by.”

‘I’m a warrior by nature’    

Vince, 51, has gone through other leadership transitions. He joined BNY in 2020 after 26 years with Goldman Sachs, where he started as a money-market trader and left as chief risk officer. He joined the elite partner ranks in 2006.

During Vince’s tenure, top Goldman officials contended with the high-profile scandal that centered on the bank’s Malaysian subsidiary and the 1Malaysia Development Berhad state fund known as 1MDB. The US Department of Justice convicted a former Goldman banker, Roger Ng, of bribery and money laundering while another former banker, Tim Leissner, pleaded guilty in connection with the scheme and awaits sentencing. 

Vince took over as Goldman’s top risk official in 2018 after his predecessor, the bank’s longest-tenured chief risk officer, retired. That August, Vince fielded questions from analysts on a call to discuss financial performance. One noted Goldman’s reputation as a strong risk manager and asked Vince what would change with the leadership shift. Not much, he replied, adding that strength they were accustomed to would continue.

“I’m a warrior by nature. We are warriors by nature, and it’s part of my job description to do that,” Vince said, according to a transcript from the investment research provider Sentieo. 

“A good risk management process is not designed to try to predict outcomes; we’re trying to prepare for everything that could potentially come across in the environment,” he added.

Vince joined BNY to oversee the firm’s sprawling clearance and collateral management, treasury services, markets, and Pershing units. His predecessors, Todd Gibbons, who is retiring, and Charlie Scharf, who left in 2019 to run Wells Fargo, each spent less than three years in the CEO seat. Scharf was appointed to take over from Gerald Hassell, the longtime BNY executive who retired in 2017 after years of activist investors gunning for improvements to the firm. About half of the executives on the 11-person board of directors have joined since 2019.  

Michael Brown, managing director at Keefe, Bruyette & Woods, said Vince has come across as thoughtful and purposeful when he has communicated his vision to analysts over the years. 

“He is not necessarily the most well-known leader out there on Wall Street, but in his interactions, he has gained credibility and respect from investors,” Brown told Insider.

Standing out in the ‘world’s worst oligopoly’ 

Vince is now laying the groundwork for improvements to BNY. He said on a call to discuss earnings in July that the strategy to grow BNY’s $264 billion wealth management business is adding more ultra-high-net-worth family office relationships, selling clients more banking services, and making the business more efficient. 

Morningstar analyst Rajiv Bhatia told Insider that wealth management, a highly competitive industry where BNY’s presence is smaller than the multi-trillion-dollar wirehouses, is its biggest growth opportunity now. BNY provides services like clearing and custody to outside financial advisors and directly to clients like wealthy families.  

Those services can be far more lucrative and differentiated than plain-vanilla custody offerings. Vince emphasized business lines coalescing on the earnings call in July, when he said the clearing and custody arm and the asset servicing business jointly rolled out a new product for a big government agency during the quarter. 

Mayo of Wells Fargo likes to refer to the custody business as the “world’s worst oligopoly” because there are just a few firms like BNY that have scale, yet they “seem to have little pricing power.”

It is hard to stand out among other big custodians like State Street, JPMorgan, and Northern Trust, other than by offering lower fees, which makes cost-cutting paramount, according to Biggar of Argus Research.

Biggar and other analysts Insider interviewed expect BNY Mellon to set out on a cost-savings initiative focused on technology upgrades and talent costs. Quarterly non-interest expenses have risen 12% year-over-year, to $3.1 billion, and overall revenue rose 7%, to $4.3 billion in the same time. 

The bank just sold off one of its investment managers, Alcentra, to Franklin Templeton this year. But Biggar said he expects the bank to acquire asset managers to combat sluggish revenue growth, especially with lower valuations now than nine months ago. Rivals have made acquisitions. State Street has said in a filing that it is currently seeking “amendments to the transaction terms, including the purchase price” of its $3.5 billion acquisition of Brothers Harriman’s investor services unit, which was announced a year ago.

Vince has indicated that acquisitions would be far down the road. A “large and transformational sort of transaction is not very high on my list of priorities right now,” he told analysts in July, adding that he is “much more focused on the organic growth.”

‘For some customers, that can get confusing’   

BNY has installed new leaders in other posts over the last year. Some former executives left to join Scharf at Wells Fargo, like former finance chief Michael Santomassimo, former global head of operations Lester Owens, and former vice chairman Bill Daley. 

BNY is now replacing its chief financial officer with Dermot McDonogh, a former longtime Goldman executive who Vince worked with for decades. Last fall, BNY also hired a new global head of marketing and communications, Natalie Sunderland, who previously ran marketing at the big financial-tech startup Addepar.

In the world of finance, with big splashy deals and retail trading manias, custody and asset servicing is bland and technical in comparison. Analysts say better conveying BNY’s services and what it can offer is one priority Vince and his leadership team will have as he steps in.

“That messaging is really important because of the sprawling nature and the amount of things they do. I think for some customers, that can get confusing,” Michael Elliott, an analyst at CFRA, told Insider.

Wall Street will be watching closely. Autonomous Research analyst Robert Wildhack said a core challenge for Vince is balancing these demands: emphasizing growth opportunities, keeping core businesses humming, getting costs in check, and boosting returns for investors. 

If he can do all of that, Wildhack told Insider, “that becomes a pretty nice story.”

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