State Street Plans 630 Layoffs - Analyst Blog
January 22 2013 - 8:50AM
Zacks
Close on the heels of declaring better-than-expected results,
State Street Corporation (STT) announced to
eliminate nearly 630 jobs worldwide – 2% of its workforce. Majority
of the layoffs (nearly 260 jobs) are expected to occur in
Massachusetts.
State Street made this announcement during the earnings conference
call on Jan 18. The company’s CEO stated that the impending job
cuts are aimed at offsetting the effects of the persistent low
interest rate environment and low trading activity. The company has
been facing tremendous pressure from the shareholders to contain
the rising costs and boost the bottom line.
State Street – one of the biggest custody banks – expects the
operating backdrop to remain challenging in 2013. Consequently, the
company anticipates tougher counteractive measures to keep intact
the top-line expansion.
In 2010, State Street announced a global multi-year program
designed to accelerate growth. The company plans to achieve annual
pre-tax expense savings of approximately $540 million by the end of
2014 and approximately $600 million in 2015. The company
currently remains on track to achieve its target.
This is not first time State Street has resorted to retrenchment.
Earlier in 2010, the company had eliminated approximately 1,400
jobs and in 2009, it had chopped of about 1,700 jobs. Some of the
other banks that have slashed their workforces as part of their
cost containment measures include Bank of America
Corporation (BAC), The Bank of New York Mellon
Corporation (BK) and Citigroup Inc.
(C).
State Street had reported fourth-quarter earnings per share, which
substantially surpassed the Zacks Consensus Estimate.
Better-than-expected results benefited from improvement in the top
line, partly offset by higher operating expenses. Although asset
position remained robust, capital ratios showed mixed trends.
It is imperative for financial institutions to take up cost
containment measures seriously amid such a challenging operating
environment.
State Street currently carries Zacks Rank #3 (Hold).
BANK OF AMER CP (BAC): Free Stock Analysis Report
BANK OF NY MELL (BK): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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