JANUARY 19, 2018 — IT APPEARS WORSE THAN ORIGINALLY THOUGHT — 1,500 EMPLOYEES NOW TARGETED PLUS THE SENIOR EXECUTIVES PREVIOUSLY ANNOUNCED
In addition to the cuts in senior management, the company has announced that it will be laying off approximately 1,500 employees in “high-cost” locations.
It is believed that the recent acquisition of Charles River Development precedes an increase push to automate State Street’s front-end operations and integrate the back office functions. Something that is bound to reduce the headcount further.
According to newly-elevated CEO, Ronald O’Hanley, “While we have made progress on our technology transformation, much remains to be done and we are not satisfied with our recent performance. Structural costs are still too high and our automation efforts have not moved fast enough. The changes we are making will position us well to realize 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.”
Boston, Massachusetts-based State Street Corporation, the multinational financial institution and the operator of the nation’s second oldest continuously operated bank, is continuing to execute “Project Beacon,” a multi-year cost-cutting campaign to reduce costs by increased automation. In addition, the company has announced that they will laying off 15% of its senior management which will include executive and senior Vice Presidents to remove unnecessary management layers and to simplify the organizational structure.
Management refuses to provide an exact number, but the speculation is that at least 100 senior employees are involved in order to generate the level of cost-savings needed to justify the reduction in force.
In a slide from an investor presentation at Goldman Sachs US Financial Services Conference …
There is little doubt that the company experienced poor performance in 2018 and a corresponding drop in their stock valuation. There is also the issue of the necessity to acquire Charles River Development for $2.4 billion to gain access to the company’s investment management and front-office automation tools and solutions.
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