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BNY Mellon will cut its work force by 3 percent or 1,500 positions, by year's end, as it sees expenses growing faster than revenue.

The fact that both fixed and variable annuities posted sales increases in June wasn’t quite as rare as summer snow, but it was enough to raise eyebrows among industry watchers.

BNY Mellon to Cut 1,500, as Expenses Rise Faster than RevenuePrinter Friendly Email Reprints Reader Comments Share | August 10, 2011Tom Steinert-ThrelkeldBNY Mellon said Tuesday it planned to cut its work force by 3 percent or 1,500 positions, by year, as it sees expenses growing faster than revenue.Like what you see? Click here to sign up for Securities Technology Monitor's weekly newsletter to get the latest news and analysis that matters to the effective operation of capital markets.The cuts will come by year end, after a review by all businesses of the composition of its global workforce of 48,900, spokesman Kevin Heine said.The announcement of the cuts comes less than a month after the company posted solid earnings growth.The provider of asset servicing, issuer services, clearing services and other investment services reported second quarter net income of $735 million, up from $658 million a year ago and $625 million in the first quarter of 2011."Over recent quarters, BNY Mellon has succeeded in building positive revenue momentum. However, expenses have been growing unsustainably faster," said Robert P. Kelly, BNY Mellon chairman and chief executive officer.In the past year, revenue has grown 19.6 percent, to $3.1 billion in the second quarter of this year. But staff, professional, legal, software and other “noninterest” expenses have risen 21.2 percent (see chart).Jobs are not the only target for expense reductions. The company also expects to rationalize technology picked up in a series of acquisitions in recent years, most notably the $2.3 billion purchase of the Global Investment Servicing Business of PNC Financial Services Group.In the company’s second quarter earnings call last month, Chief Financial Officer Thomas Gibbons said:There is some low-lying fruit. I mean, if you think about it, we've gone through a number of acquisitions over the past 3 or 4 years. So when we go back and reflect on our technology infrastructure, there's quite a bit we can attack there. We've got too many desktop configurations just the nature of our business model, and we're going to go after that. We also have some applications dating back to the Mellon Bank of New York merger, which we think we can sunset too, and we also for the first time are really looking at combining some of our common operations not just within asset servicing, but even across some of our different businesses.BNY Mellon is not planning to offer any voluntary departure packages, Heine said. Instead the company will rely on “natural turnover” and an immediate hiring freeze to hit its job cuts target.The company also expects to reduce its use of temporary workers, consultants and contractors

Chief financial officers in the U.S. and Europe are largely optimistic about sales and earnings for their individual companies through the rest of the year, but rising commodity prices and extreme volatility in the equities markets has most convinced inflation is on the rise and will likely hinder any substantial recovery in the overall economy.

WASHINGTON—Standard & Poor's downgrade of U.S. debt last week is likely to hasten the replacement of credit ratings within bank regulatory requirements.

Investors desperately seeking diversification amid all the volatility in stocks both in the U.S. and abroad found some salvation in commodities last month as 15 of 19 constituents in the Dow Jones-UBS Commodity Index gained ground.

In January, the GAO issued a study that took a pass on regulating the financial planning profession, saying it did not have enough information to form one. Perhaps they will think differently after the summer is over, after TD Ameritrade Institutional wraps up a high-level study on advisor oversight.

World cotton production in 2011 is now expected to exceed more than 27 million tons, according RISI, resulting in lower prices in the dissolving pulp market.

The August reading of the Consumer Reports Index fell to 43.3, its lowest level since December 2009. Falling 5.1 points from 48.5 in July, the index registered its sharpest drop in two years.

Market volatility and an uneven path for the economic recovery are set to continue for years, according to Towers Watson. What’s more, all asset classes will face higher-than-average volatility, Towers Watson said.