State Street CEO, President Plan to Retire -- 2nd Update
November 07 2017 - 2:48PM
Dow Jones News
By Justin Baer
State Street Corp. Chief Executive Joseph Hooley and President
Michael Rogers plan to retire as part of a leadership shake-up, the
giant custody bank said Tuesday.
Former Fidelity Investments executive Ron O'Hanley will succeed
Mr. Hooley as CEO by the end of 2018, the company said. State
Street this week appointed Mr. O'Hanley president and chief
operating officer, replacing Michael Rogers.
"He's the logical choice," said Mr. Hooley, 60 years old, who
joined the bank 31 years ago. "Ron represents an individual with
great vision, and a strategic mind. He has lived in the shoes of
our core client set for most of his career."
Mr. O'Hanley, 60, was previously in charge of State's Street's
asset management business where he pushed to round out the firm's
investing offerings beyond index-tracking funds. He joined the
Boston company in 2015 from Fidelity Investments, where he was
president of asset management and corporate services. Earlier in
his career he ran Bank of New York Mellon Corp.'s money-management
arm.
Mr. Rogers, who joined State Street a decade ago through an
acquisition, opted not to be a candidate in the CEO search, Mr.
Hooley said. Mr. Rogers will retire from the company at the end of
2017, the company said.
State Street joins rivals BNY Mellon and Northern Trust Corp. in
unveiling succession plans this year, a mark of an industry
adapting to sweeping changes. Many of the banks' top clients are
asset managers under immense pressure to lower costs and find new
areas of growth as investors shift assets to ETFs and other
low-cost funds.
"What's remarkable is how in a business that's really stable and
sort of beautifully boring that you have a decent amount of
management change," said Brennan Hawken, an analyst with UBS Group
AG. "When you're going through this magnitude of change, ushering
in a new perspective can make a lot of sense."
Mr. Hooley, who became CEO in 2010, led State Street through the
aftermath of the last financial crisis. The downturn ushered in a
new era of regulations restricting how large banks took risks and
returned capital to shareholders, and U.S. officials deemed State
Street, along with its rival, BNY Mellon, a systemically important
firm, adding to the banks' regulatory burdens.
In 2011, State Street found itself targeted by activist investor
Trian Fund Management LP. Trian argued State Street should be more
profitable than it was and called for the spinout of the
asset-management arm.
Mr. Hooley responded by cutting expenses and seeking the Federal
Reserve's approval to buy back more stock. Trian eventually pared
its stake in State Street.
The bank had made strides to boost profitability, Mr. Hawken
said.
"At this stage, he has made the changes that he was in a
position to effect, and got State Street on stable footing," he
said. "Investors' view of State Street's stock is meaningfully
better."
State Street's shares have climbed 17% this year and hit an
all-time high last month.
At the start of 2017, Mr. Hooley said he told State Street's
board that he believed "a couple more years felt right," following
progress made on technology investments in its core custody and
asset-servicing division and other businesses.
The board agreed, and the search for Mr. Hooley's successor
looked at both external and internal candidates. Mr. Hooley said
the board asked him to stay on as chairman for one more year after
he steps down as CEO, and he agreed.
State Street picked another Fidelity alumnus, Cyrus Taraporevala
to succeed Mr. O'Hanley as president and chief executive of State
Street Global Advisors, the bank's $2.7 trillion asset manager.
State Street Global Advisors, best known for its lineup of
low-cost exchange-traded funds, last year acquired General Electric
Co.'s asset-management unit to beef up its ties to insurers and
defined-benefit plans that outsource their portfolios.
More recently, SSGA slashed its management fees on 15 ETFs to
lure more retail investors. State Street had launched the first ETF
more than two decades ago, but in recent years the firm had lost
ground to Vanguard Group and BlackRock Inc.
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
November 07, 2017 14:33 ET (19:33 GMT)
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