State Street to lay off 15% of senior management
State Street’s new CEO is executing on a plan to whittle the management ranks.
The firm is cutting 15% of its senior management beginning Wednesday as it continues to tackle costs, according to people with knowledge of the matter, who asked not to be identified because the information is private. The bank has hundreds of senior managers, and those affected include executive vice presidents and senior VPs.
It's the firm's largest headcount reduction since 2016.January 10
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Ronald O’Hanley, who took over this month as CEO of the money management and custody-banking giant, is pushing to reduce expenses, automate more functions and simplify the organizational structure. State Street needs to “structurally compress” upper management, he said last month at a Goldman Sachs U.S. Financial Services Conference in New York.
In response to the news, Wells Fargo Securities put out a note estimating that the cuts involve a few hundred employees and will reduce annual expenses by as much as $75 million.
Marc Hazelton, a spokesman for Boston-based State Street, which has more than 30,000 employees, declined to comment on the number of senior managers who are being laid off.
O’Hanley referenced Project Beacon, the company’s multiyear initiative to reduce costs through automation, in his conference presentation.
“When you do that, one, you’re simplifying the way business gets done at State Street,” he said. “But two, you just don’t need as many top-end senior managers to get the work done.”
State Street’s stock has taken a hit as choppy markets hurt fee revenue. The shares fell 35% last year, compared with a 27% drop for S&P’s index of 18 asset managers and custody banks.