State Street Is Cutting 1,500 Jobs
January 18 2019 - 10:26AM
Dow Jones News
By Justin Baer
State Street Corp. said Friday the custody bank will shed about
1,500 employees in a new cost-cutting plan designed to help weather
tough market conditions.
The bank, which provides bookkeeping and other back-office
services to nearly 90% of the world's biggest asset managers, will
eliminate positions in higher-cost offices such as Boston, New York
and London, as it automates parts of its operations. The cuts
include the 100 or so senior management jobs State Street said last
month it would cut.
"While we have made progress on our technology transformation,
much remains to be done and we are not satisfied with our recent
performance, " State Street Chief Executive Ron O'Hanley said.
"Structural costs are still too high and our automation efforts
have not moved fast enough."
The cost-cutting plans, which aim to shed some $350 million in
expenses this year, come at a fragile time for money managers and
the custody banks that serve them.
A weak stock market in 2018 and uncertainty about the global
economy has led many investors to pull assets from managers or at
least hold off in committing new money. Low-cost index funds
continue to outdraw stock- and bond-picking strategies, adding to
the pressure on managers' profit margins.
State Street took a $223 million charge in the fourth quarter to
account for the costs associated with the expense program.
The bank said net income rose to $388 million, or $1.04 a share,
from $19.2 million, or 17 cents, a year earlier. Excluding charge
and other items, State Street earned $1.68 a share in the
most-recent period. On that basis, analysts had expected a $1.70
profit.
Revenue rose 4.9% to $2.99 billion, slightly above analysts'
average estimate.
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
January 18, 2019 10:11 ET (15:11 GMT)
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