8-K

 
                     SECURITIES  AND  EXCHANGE  COMMISSION

                             Washington, D.C. 20549



                                    FORM 8-K

                                 CURRENT REPORT



     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported) - May 20, 1998



                           MELLON  BANK  CORPORATION
               (Exact name of registrant as specified in charter)



         Pennsylvania               1-7410          25-1233834
 (State or other jurisdiction    (Commission     (I.R.S. Employer
       of incorporation)         File Number    Identification No.)



                  One Mellon Bank Center
                     500 Grant Street
                 Pittsburgh, Pennsylvania              15258
         (Address of principal executive offices)    (Zip code)



      Registrant's telephone number, including area code - (412) 234-5000

                                 Not applicable
         (Former name or former address, if changed since last report)

 
ITEM 5.  OTHER EVENTS

         By press release dated May 20, 1998, Mellon Bank Corporation
         acknowledged the withdrawal of The Bank of New York's unsolicited
         merger proposal.


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS


99.1     Mellon Bank Corporation Press Release, dated May 20, 1998,
         announcing the matter referenced in Item 5 above.


                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              MELLON BANK CORPORATION


Date:  May 20, 1998           By:   /s/  STEVEN G. ELLIOTT
                                    Steven G. Elliott
                                    Vice Chairman and Chief Financial
                                    Officer

 
                             EXHIBIT INDEX
 
Number               Description                            Method of Filing
- ------               -----------                            ----------------
 
99.1       Press Release dated May 20, 1998                  Filed herewith

EX-99.1

 
                                                                         EX-99.1


                MEDIA:        ANALYSTS:
                Stephen K. Dishart  Donald J. MacLeod
                (412) 234-0850  (412) 234-5601
 

FOR IMMEDIATE RELEASE

              MELLON REMAINS FOCUSED ON SUCCESSFUL GROWTH STRATEGY

PITTSBURGH, May 20, 1998--Mellon Bank Corporation (NYSE: MEL) today acknowledged
the withdrawal of The Bank of New York's unsolicited merger proposal.  The
decision by the Mellon board of directors to unanimously reject BONY's proposal
was based upon the judgment of what is best for all of Mellon's constituencies.
Mellon is doing extremely well; our shareholders, customers, employees and
communities will continue to be best served by the growth strategy that has
contributed to our outstanding momentum and exceptional performance for our
shareholders.

     Based on a very careful, thorough and comprehensive review by the Mellon
board of directors, BONY's request to meet with Mellon's board was unanimously
rejected.  At the board's direction, the following letter responding to BONY's
request was sent to Tom Renyi and BONY's board of directors on Tuesday, May 19,
1998.

     The text of Mellon's letter responding to Renyi follows:
May 19, 1998

Mr. Thomas A. Renyi
Chairman & Chief Executive Officer
The Bank of New York Company, Inc.
48 Wall Street
New York, New York 10286

Dear Tom:

Mellon's board of directors has met, considered and unanimously rejected the
request made in your letter of May 14, 1998, that you be invited to meet with
Mellon's board to present your merger proposal.

                                     -more-

 
Mellon Acknowledges BONY Withdrawal
May 20, 1998
Page 2


The board's principal concern, and a key reason for rejecting your merger
proposal, is the board's lack of confidence in you and your proposal.  Your
persistent propagandizing, regardless of your repeated statements only to pursue
your proposal on a consensual basis, has only served to confirm the board's
view.  The board will not allow itself to be used by you as a forum for your
ill-conceived campaign to pressure it into making a decision that would violate
its judgment and responsibility.

Your continued public comments and efforts to force an unwanted merger between
our two companies are detrimental to Mellon.  Accordingly, the board has
directed me to communicate to you again in the hope that you may finally
understand why Mellon's board came to its unequivocal determination.

As spelled out in the following eight points, a merger with BONY is not in the
best interests of our shareholders, customers, employees or the communities we
serve.

1.  Mellon's board unanimously concluded that a merger with BONY would be
detrimental to all Mellon constituencies.  The board has given your proposal
thorough consideration.  The decision to reject the proposal is based upon
extensive discussions and due diligence by management over a two-year period,
assisted by independent legal and financial advisers.  It was concluded that a
merger would not enhance the shareholder value we have worked so hard to build,
but would actually result in lower value for our shareholders.  The fact is that
our communities are our business; and our employees are key to our success.  The
extreme layoffs required by the merger would be devastating to our business
strategy, employees and the economies of the regions where we operate.

2.  Mellon's board lacks confidence in you and your proposal.  Key among the
reasons for rejection of the proposal is the Mellon board's lack of confidence
in you as a leader of such a complex company.  We have made this abundantly
clear to you over the past two years.  Our board does not believe you have the
commitment or the experience to implement a strategy that capitalizes upon the
quality of the Mellon franchise and the value inherent in it.  The unrealistic
cost savings and revenue enhancements you propose indicate that you do not
understand Mellon's businesses and our customer base.  As a result, the proposal
presents significant execution risks that threaten Mellon's revenue retention
and future growth.

3.  Mellon has delivered outstanding shareholder returns and is positioned for
continued superior growth in the future.  Many of our shareholders have
expressed concern about the risks of the proposed transaction while restating
their belief in our ability to continue to deliver superior shareholder value.
One need only look at our total return of  911 percent over the decade of the
1990s to realize that Mellon has delivered on its strategy.  During the same
time, the return on the Keefe, Bruyette & Woods 50 bank index was 473 percent
while the S&P 500 was 297 percent.  Our most recent earnings set another record
with outstanding returns, which we believe are indicative of the future.  In the
first quarter of 1998, Mellon's return on common equity was 21.6 percent and
return on assets was 1.89 percent, placing us among the industry leaders.  These
results incorporate 16 percent year-over-year growth in fee revenue, which
resulted in a 13 percent increase in income on a reported basis and a 14 percent
increase on a tangible basis over the first quarter of 1997.  Our results, you
will note, were not dependent on an aggressive stock repurchase program such as
your company has used.

                                     -more-

 
Mellon Acknowledges BONY Withdrawal
May 20, 1998
Page 3

4.  Your proposal creates substantial execution risks that severely threaten
revenue retention and growth.  Your proposal is based on unrealistic and
unattainable goals to achieve the financial projections required to make the
merger accretive to BONY shareholders.  The proposal significantly
overemphasizes expense reduction which jeopardizes real top-line revenue growth.
Not only does the proposal require that revenues grow at the natural growth rate
of the individual companies, but it also assumes retention of all existing
revenue and achieving an additional $200 million to $300 million in revenue by
the end of the first year--this, while costs are being cut dramatically within
one year by $700 million and thousands of employees are being terminated.  At
the same time, both companies face the challenge of year 2000 compliance.  In
addition, difficulty in retaining key employees in this type of atmosphere--
particularly in high-value-added businesses like investment management--further
threatens the revenue growth potential.

5.  Our tolerance for risk is not compatible.  Mellon has consistently pursued a
strategy that includes a strong and highly profitable retail banking business.
This stable, relatively low-risk business has been an important contributor to
Mellon's growth in earnings.  You have indicated that retail banking is not a
part of BONY's strategy and that you would divest this business as  soon as you
meet certain pooling tests.  At the same time, your organization has chosen to
pursue large corporate lending aggressively, creating significantly larger risk
concentrations that are unacceptable to Mellon's board.  The combination of
these two factors would increase substantially the risk profile for Mellon
shareholders.

6.  The Mellon customer defections resulting from a BONY merger would be
significant.  In the high-return fee businesses, our customers--a number of whom
have come to us from BONY--demand sophisticated product features and a high
level of service.  Customers, particularly in our trust businesses, have told us
directly that they will sever their relationship with us if a merger with BONY
goes forward.  Losing customers means lost revenue and lost shareholder value
and it is inconsistent with your assumption that all existing revenue would be
retained.

7.  Mellon's strategy works.  Your persistence in this matter is recognition
that Mellon's strategy is successful, yet the proposed merger strikes at the
heart of that strategy.  As BONY has acknowledged, "there is no other
organization that has the mix of businesses that Mellon does."  The balance and
mix of our business lines, predominantly in the high-growth, high-return
businesses, as well as our broad base of fee and non-fee businesses, allow us to
continually increase earnings while minimizing volatility.  It also allows
Mellon to be less sensitive to economic and business cycles.  Finally, by not
overreaching in any single business, Mellon limits its exposure to large
downside potential when market or economic conditions negatively impact a
particular area.  In fact, this is in sharp contrast to BONY's business mix
which is heavily concentrated in the lower-growth, lower-return, higher capital-
attracting sectors.  This concentration would dilute Mellon's higher-growth,
higher-return, lower capital-attracting businesses.

8.  Your proposal may or may not serve BONY's needs, but it certainly does not
serve Mellon's.  In fact, it would put at risk the entire Mellon franchise to
the ultimate disadvantage of shareholders, customers, employees and communities.
Our track record speaks for itself.  Our only responsible course of action,
having thoroughly analyzed and studied BONY and its proposal, is to use Mellon's
strengths to support our strategy, not yours; our shareholders, not yours; our
employees, not yours; and our communities, not the communities served by your
company.

                                     -more-


 
Mellon Acknowledges BONY Withdrawal
May 20, 1998
Page 4

Tom, you have repeatedly stated that your proposal is conditioned upon being
consensual.  Your continued agitation is harmful to Mellon.  It is time for you
to live up to your public statements, withdraw your offer and abandon
permanently your hostile takeover efforts.


Sincerely,
Frank V. Cahouet
Chairman, President and Chief Executive Officer
cc:  The Bank of New York Board of Directors

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