The financial market meltdown of Sep- tember 2008 was a career-ender for some Wall Street bankers, but for Karen Peetz and her team at BNY Mellon, it was the opportunity of a lifetime.
Peetz, who had been head of BNY Mellon’s financial markets and treasury services group for
three months, was on vacation that fateful week of
Sept. 15, when Lehman Brothers failed, a leading
money-market mutual fund “broke the buck,” and
AIG collapsed into the government’s arms.
Unable to relax, Peetz cut her trip short and returned to her New York office, partly to calm her
troops, but also to assess how BNY Mellon could
help with the ensuing government rescue effort.
BNY Mellon is a custody bank, after all, and it’s one
of the best in the business at managing money. It
didn’t hurt that the bank was far healthier and
more stable than many of its peers.
Though “everyone was really down in the
dumps,” Peetz recalls, “it was very clear to me that,
in the morass, there was a huge role for us to play.”
The bank’s global corporate trust division, one of
six units Peetz oversees, won the bidding to administer the Troubled Asset Relief Program, beating out
roughly 70 other firms. It was later tapped to administer two other programs designed to unlock the
credit markets—the Federal Reserve’s Term Asset-Backed Securities Loan Facility and the Treasury’s
Public-Private Investment Program. (It’s worth noting that the bank’s broker-dealer services unit, which
also reports to Peetz, played a critical role at the
height of the crisis by helping distressed Wall Street
firms gain access to liquidity.)
CEO FINANCIAL MARKETS, TREASURY SERVICES, BNY MELLON
Peetz says BNY Mellon’s role in administering
TARP has been “soup-to-nuts”—from moving
money from Treasury to banks, to keeping track of
how the funds are being used to running auctions
for warrants when banks repaying TARP funds
can’t agree with Treasury on price.
The opportunity to play an integral role in the
government rescue ranks among the most rewarding experiences of her career, says Peetz. And
she’s especially proud that her team’s work with
Treasury and the Fed has since led to similar assignments with “some very large governments
outside of the U.S.,” which she would not name.
Peetz was promoted from CEO of the bank’s
global corporate trust unit to her current post in
June 2008, reporting directly to BNY Mellon
chairman and CEO Bob Kelly. She runs a group
that employs some 10,000 people worldwide, accounts for about one-third of BNY Mellon’s roughly
$13 billion of annual revenue and contributes even
more to the bottom line.
Kelly says it was Peetz’s talent for growing existing
business lines while simultaneously integrating acquired businesses and achieving better-than-ex-pected cost savings that earned her the promotion.
Plus, he says, she is “really client-focused,” a skilled developer of talent, and thinks globally, “which is what
you’ve got to do in our business, because over one-third of our revenue comes from outside the U.S.”
One of Peetz’s key initiatives has been fostering
more collaboration between business units. So far,
they have identified six meaningful cross-selling
opportunities to generate new revenue, including
the trading of carbon credits.
Spending time with family and friends
Children: Two (Both 23)
Last book read: The Space Between Us
Last movie seen: “The Reader”
Charity most active in: The United Way of New York City
One thing on “bucket” list: Taking an Orient Express train trip
Top non-business concern: Poverty
Peetz continues to chair the bank’s Women’s
Initiatives Network, which she founded five years
ago to promote the advancement of women in the
company, and keeps teaching leadership classes.
Still, with the additional duties and longer
hours, something had to give. In a US Banker
profile a year ago, Peetz listed “remodeling houses” as
her favorite pastime. This year? “I haven’t done any
of those,” she says.—Alan Kline
PAYMENT SERVICES, U.S. BANCORP
Most payments executives found themselves pulled to the center of a perfect storm
this year, and Pamela Joseph, U.S. Bancorp’s vice chairman of payment services, has
weathered it remarkably well.
“She’s impressed me as much as ever, if not more,” said Richard Davis, the Minneapolis company’s chairman and chief executive. “Pam has continued to power
through on developing innovation and next-generation products in the space, even when
a lot of others would have just battened down and waited for the weather to pass.”
Payments has been hit particularly hard at most institutions this year, due to
mounting losses on credit cards and lowered consumer and corporate spending —
and the headwinds from a new law that is already restricting card issuers’ profitability.
Joseph was on the front lines of the industry’s efforts to shape that law: she was the
only woman representing the credit card industry when President Obama met with
executives at the White House in April, a month before he signed the bill.
“I’m not sure we were able to change anything dramatically, but at least you could
walk away and feel like we had our shot,” she said. The president “had a very clear understanding of the industry, and the pluses and the minuses to what he was about to do.”
The payments storm could have been particularly damaging to U.S. Bank, which
depends on Joseph’s division for over a quarter of its annual net income. The unit was
not immune to the economic downturn—second quarter net profit fell over 60 percent
from the year-earlier period, to $179 million, and revenue was flat at $991.4 million. But it
still outperformed other major issuers. (U.S. Bank’s credit card losses, for example, rose to
7. 36 percent but are still well below the chargeoff rates at its largest competitors.)
Joseph has bulked up collections resources to handle these increased card losses, but,
like Davis, she is more focused on new opportunities and innovation. “We have signed a lot
of bank partners and credit unions who’ve wanted to either sell an asset—meaning their
card portfolio—or to move to an external processor to save expenses,” says Joseph. “So
we’ve seen some real benefit because of the downturn.” This year alone, her division has
unveiled Syncada LLC, a business-to-business payments network joint venture with Visa
Inc.; bought credit card portfolios from companies including Citigroup Inc. and Town North
Bank; and launched a new “FlexPerks” credit card rewards program to replace the loss of a
lucrative co-brand partnership with Northwest Airlines Inc. Joseph says U.S. Bank has “
exceeded” the expected customer retention rate as it converted the cards to FlexPerks.
Hanging out with the family
Three ( 8, 16 & 20)
Last book read:
Outliers: The Story of Success
Last movie seen:
Charity most active in:
Gift for a Child Inc.
One thing on “bucket” list:
Learning how to fly a plane
Top non-business concern:
Getting young people to work
Joseph also responded to a broad pullback in corporate travel-and-entertainment spending by launching an initiative to get more business from government agencies that received stimulus money. That
program has increased U.S. Bank’s penetration of the
federal government, which has become “a big piece”
of the corporate payments business, she says.
This strategy has won her boss’ respect, and his
wallet.“Pam always has my first dollar,” Davis says,
who adds that Joseph has the “ability to understand
the marginal and absolute value of a transaction.”
“As a CEO, of all the people who will come to me
with an opportunity,” he says, “no one has a higher
level of walk-in-the-door trust with me than Pam does.”