Friday 19 July 2019

State Street laying off 15pc of senior management in push to cut costs

Ronald O’Hanley, CEO of State Street Corp. Photo: Bloomberg
Ronald O’Hanley, CEO of State Street Corp. Photo: Bloomberg

Sabrina Willmer and Annie Massa

State Street Corp is dismissing 1,500 employees in a push to cut costs and automate more of its business.

The reduction amounts to about 6pc of the workforce in high-cost locations, the Boston-based bank said in an earnings statement on Friday. That includes 15pc of senior management.

The company had more than 39,000 employees as of the end of September last. "Structural costs are still too high and our automation efforts have not moved fast enough," CEO Ronald O'Hanley said in the statement.

"The changes we are making will position us well to realise our three-year strategic vision to be the leading asset servicer, asset manager, and data insight provider to the owners and managers of the world's capital."

The shares rose 2.7pc in trading in New York on Friday. O'Hanley, who took over as CEO this month, is moving swiftly to reorganise the money-management and custody-banking giant after the shares lost more than one-third of their value last year.

The reductions are aimed at saving $350m (€307m) in 2019, the company said.

O'Hanley has said that the firm needs to reduce structural costs by 2pc to 3pc a year.

Rocky markets have battered State Street, crimping third-quarter fee revenue. Meanwhile, analysts have questioned whether the purchase of a software maker was too costly. But the prospect of cost reductions has pushed the stock up, with State Street rallying 13pc this year up to January 17.

That has made it the second-best performer among 18 companies in S&P's index of money managers and custody banks.

BlackRock Inc, the world's largest manager, also announced this month plans to eliminate 3pc of its workforce, or 500 people, amid changing investor preferences and rising market uncertainty.

Bloomberg

Bloomberg

Also in Business