State Street eyes more job cuts as profits fall
US – State Street Corp. plans further staff reductions and “operational efficiencies” to offset lower than expected revenue.
The cuts are in addition to around 1,000 job cuts that were announced in February as part of the consolidation of its acquisition of Deutsche Bank’s custody business.
The company said in a statement that “revenue generation was lower than State Street's expectations” in the first quarter, while expenses increased from the fourth quarter.
“To address this adverse environment, we are systematically reducing spending during the second quarter to reflect the lower level of revenue,” it added.
“We are planning to implement operational efficiencies that involve system consolidations as well as staff reductions and delays in hiring,” said chairman and chief executive David Spina.
The company said that it is strengthening its presence in Europe, expanding its investment servicing capabilities to meet the needs of hedge funds and wealth managers.
It put the lower revenue projections down to a compressed interest rate spreads and falling equity markets.
It said it expects its first quarter earnings to be around 0.27-0.29 cents in the first quarter, compared to a year-before figure of 54 cents.
Spina said: "To address this adverse environment, we are systematically reducing spending during the second quarter to reflect the lower level of revenue.”
He added that the integration of Deutsche Bank's custody arm – bought for 1.5 billion dollars – is “on track”.
"Although first-quarter results will be below our expectations, we remain confident about our long-term strategy and outlook,” Spina said.