By Justin Baer
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 8, 2018).
As Charles Scharf settled into his first weekly sales meeting at
Bank of New York Mellon Corp. last summer, the newly named chief
executive thought there were far too many of his colleagues
there.
Within weeks, the meetings were revamped -- fewer employees were
invited and those that did were expected to participate. "It's true
of everything," Mr. Scharf told The Wall Street Journal. "Meetings
should have as few people as possible, but all the right
people."
It is a familiar tenet to those who worked alongside Mr. Scharf
at Citigroup Inc. and later JPMorgan Chase & Co., where he
served for years as a top lieutenant to CEO James Dimon. Both Mr.
Dimon and Citigroup's Sandy Weill leaned on a small cadre of
deputies to overhaul businesses, with deputies that could often
"finish each other's sentences" in rooting out bureaucracy, one
former colleague said.
Mr. Scharf, who joined BNY Mellon in July, is turning to pages
of the same playbook as part of a broader overhaul. He already has
laid off staff, consolidated office space and overhauled executive
pay. His challenge is to kick-start the bank that has been mired by
slow growth and price wars that have weighed on profit.
BNY Mellon completes some of Wall Street's most vital, if
boring, tasks: connecting many of the world's sellers to buyers,
tracking the value of securities and safeguarding trillions of
dollars in assets. Yet many of those businesses still rely heavily
on legions of operations employees. Alexander Hamilton, who founded
the Bank of New York more than two centuries ago, "left for the
duel and told the bank not to change anything until he got back,
and they haven't," one former competitor said, recounting an old
joke about the custody bank.
At an investor meeting Thursday, Mr. Scharf will outline his
plans for change, and details on additional cost cuts are
likely.
Of BNY Mellon's 53,000 employees, some 20,000 work in
operations. As the bank moves to automate processes, in time "that
number should be a fraction of what it is," Mr. Scharf said.
For example, BNY Mellon still receives about 20,000 faxes a day,
he said.
BNY Mellon aims to ride one of the biggest changes to affect the
financial world in decades: the digitization of nearly every step
that money takes as it flows through the global economy. Mr. Scharf
is spending heavily in technology in an effort to better harness
the reams of data produced by the assets they oversee. In January,
he told investors that he would plow all of this year's benefits
from the new U.S. tax rules -- some $250 million -- into
investments in technology and employees.
And then there is the dress code. It is common for Mr. Scharf to
arrive at work wearing black jeans.
That is just one example of the ways Mr. Scharf has shed some of
BNY Mellon's formalities that, at times, stifled debate, executives
said. Meetings and emails were often riven with corporate speak.
When a team produced a memo ahead of a client meeting not long
after Mr. Scharf's arrival, a document one executive conceded was
"written for a different era," the CEO demanded a rewrite.
Mr. Scharf started his career at Commercial Credit Co. not long
after Sanford Weill acquired the consumer lender.
In 1998, Mr. Weill fired his longtime protégé, Mr. Dimon, who
landed on his feet at Bank One Corp. in Chicago. Mr. Scharf
followed Mr. Dimon to Bank One, and then back to New York when J.P.
Morgan bought Bank One. Mr. Scharf got one of the combined
company's biggest jobs: running the sprawling consumer-banking
division.
The similarities end there, though. Whereas Mr. Dimon is
gregarious and prone to saying what is on his mind, Mr. Scharf is
reserved and careful, former colleagues said.
"Charlie is very much his own man," said Ryan McInerney, a
former J.P. Morgan executive who joined Mr. Scharf at Visa Inc.
tapped as its president.
He got his first chance to run a company in 2012, when Visa
tapped Mr. Scharf as CEO. Moving to San Francisco, Mr. Scharf
completed the payments company's transition from a nonprofit
association to a publicly traded corporation that shared its code
more openly with banks and other users.
Mr. Scharf soon sought to spend more time back to New York to be
closer to family, and in 2016, he stunned the industry by
announcing his departure.
In December of that year, he had dinner with Gerald Hassell,
then BNY Mellon's CEO.
Mr. Hassell was still dealing with the aftereffects of the
financial crisis, which had upended BNY Mellon's business model.
BNY Mellon's profit had shrunk, and in 2014 activist investor Trian
Fund Management LP bought a stake in the firm and pushed for
changes.
Mr. Hassell was successful in curbing expenses, but efforts to
revitalize its technology systems were stymied by frequent delays.
It also faced an embarrassing technology glitch in 2015 by vendor
SunGard Systems Inc. that prevented the bank from calculating the
closing prices on some 1,200 client funds.
The bank had previously laid out a plan to migrate clients from
the SunGard system to its own, a conversion that is still years
away from completion, people familiar with the matter said.
Mr. Scharf is eager to pickup the pace. He also has been careful
not to move too quickly, sounding out some of his new colleagues on
how to avoid alienating employees, people familiar with the matter
said.
"Every organization can move at a different speed," Mr. Scharf
said.
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
March 08, 2018 02:47 ET (07:47 GMT)
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