Kelly earned $19.4 million last year, a 38 percent increase from 2009, boosted by stock awards and incentive pay, according to a regulatory filing. He became head of BNY Mellon after the bank bought Pittsburgh-based rival Mellon Financial Corp. in July 2007, vaulting the company past JPMorgan Chase & Co. as the largest custody bank. Kelly previously had led Mellon, which recruited him from Wachovia Corp. in 2006.

Under his tenure BNY Mellon expanded through acquisitions, buying PNC Financial Service Group Inc.'s investment-servicing business for $2.31 billion and Germany's BHF Asset Servicing GmbH for 253 million euros ($363 million) in 2010.

"I said two weeks ago Bob Kelly should be fired and I gave several reasons for it," Richard Bove, an analyst with Rochdale Securities LLC in Lutz, Florida, said in a telephone interview. Kelly was "too conservative" in setting prices for the bank's products and using the balance sheet to make money, Bove said.

Management Trainee

Hassell joined Bank of New York as a management trainee in 1973 and has been on the board of directors since 1998. He's held leadership positions in investment services, corporate banking, credit, strategic planning and administrative services. Hassell has a bachelor's degree from Duke University and a master's of business administration from New York University's Stern School of Business.

"Gerald is ideally positioned to guide BNY Mellon through the next phase of its growth and to bring it to its full potential," von Schack, lead director of BNY Mellon, said in the statement.

Custody banks keep records, track performance and lend securities for institutional investors including mutual funds, pension funds and hedge funds. State Street and BNY Mellon also manage investments for individuals and institutions. BNY Mellon, founded by former Treasury Secretary Alexander Hamilton in 1784, sold its retail bank branches to JPMorgan in 2006.

Cost Savings

BNY Mellon reported a 12 percent increase in second-quarter earnings as acquisitions and market gains lifted assets and the fees from overseeing them. The bank had assets under custody of $26.3 trillion and assets under management of $1.3 trillion at the end of June.

BNY Mellon bank said Aug. 10 it planned to cut 1,500 jobs, or 3 percent of its 48,900 employees. Kelly said that "expenses have been growing unsustainably faster" than revenue.

On a July conference call, he had said the bank would trim costs by moving people to cheaper locations, consolidating real estate holdings and cutting its procurement budget. The bank has moved jobs in the past few years to Pittsburgh, Manchester in the United Kingdom and the Indian cities of Pune and Chennai to take advantage of lower costs.

N.Y. Attorney General