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Layoffs at State Street Corp. appear to be worse than initially anticipated.
In an earnings release Friday, the company said that it will reduce its workforce by roughly 6 percent, or 1,500 employees. The cuts will come at high cost locations as the company realizes benefits of automation and standardized global processes.
Furthermore, new CEO Ron O’Hanley said on a conference call that he is also implementing a hiring freeze for all non-critical roles.
The cuts come just days after State Street said it would cut its senior management by 15 percent, as part of a broader initiative to cut structural expenses by 2 to 3 percent, and reduce layers across the bank by 25 percent.
“While SSGA results are not yet where we would like them to be, we have been working to diversify our business mix, leverage relationships across State Street and fill in offerings as we take advantage of the shift from products to solutions,” O’Hanley told investors on the call. “Regarding our overall bottom line performance simply put, we need to and can do better.”
The recently announced cuts along with other moves such as a heavier focus on automation are expected to realize $350 million in underlying expense savings in 2019, according to State Street executives.
In its fourth quarter earnings, State Street reported net income of close to $400 million, up about 19 percent from one year earlier. It also reported a 5 percent jump in revenue year-over-year.
However, expenses were also high at roughly $343 million, up 16 percent from the fourth quarter of 2017.
