NEW YORK ( TheStreet) -- BNY Mellon (BK - Get Report) is in need of a major shakeup as the bank has underperformed peers on a variety of measures, argues CLSA analyst Mike Mayo in a report published Tuesday.
"There has been no new blood on the board in a decade, with the average board member having been in place since 1997. The board's expertise in needed areas such as technology and broker/dealer could be better," writes Mayo, in a report titled "Restructure This Bank?" The analyst has had an "underperform" rating on BNY Mellon since at least April 2011. Mayo states that "improvements in governance and efficiency would help us to reconsider" the rating.
Mayo cited a below-peer pre-tax margin "on a one- and three-year basis," and a 2% rise in the stock over the past three years, compared to a 16% increase in Northern Trust Corp.
(NTRS), a 43% increase in State Street Corp.
(STT - Get Report), and a 39% rise in the S&P 500.
Mayo was also critical of the fact that the bank "says it targets 10% ROE and positive operating leverage," but "has not achieved this level for the past three years" even though "management still gets above-peer-average pay."
BNY Mellon shares were up 0.58% to $31.09 in late morning trading on volumes of 2.6 million shares compared to average daily volumes of 4.7 million shares over the past three months. Shares of State Street and Northern Trust were up 1.50% and 0.92% respectively.A spokesman for BNY Mellon declined to comment on Mayo's report. Follow @dan_freed