By Justin Baer 

State Street Corp. said Friday the custody bank will shed about 1,500 employees in a new cost-cutting plan designed to help weather tough market conditions.

The bank, which provides bookkeeping and other back-office services to nearly 90% of the world's biggest asset managers, will eliminate positions in higher-cost offices such as Boston, New York and London, as it automates parts of its operations. The cuts include the 100 or so senior management jobs State Street said last month it would cut.

"While we have made progress on our technology transformation, much remains to be done and we are not satisfied with our recent performance, " State Street Chief Executive Ron O'Hanley said. "Structural costs are still too high and our automation efforts have not moved fast enough."

The cost-cutting plans, which aim to shed some $350 million in expenses this year, come at a fragile time for money managers and the custody banks that serve them.

A weak stock market in 2018 and uncertainty about the global economy has led many investors to pull assets from managers or at least hold off in committing new money. Low-cost index funds continue to outdraw stock- and bond-picking strategies, adding to the pressure on managers' profit margins.

State Street took a $223 million charge in the fourth quarter to account for the costs associated with the expense program.

The bank said net income rose to $388 million, or $1.04 a share, from $19.2 million, or 17 cents, a year earlier. Excluding charge and other items, State Street earned $1.68 a share in the most-recent period. On that basis, analysts had expected a $1.70 profit.

Revenue rose 4.9% to $2.99 billion, slightly above analysts' average estimate.

Write to Justin Baer at justin.baer@wsj.com

 

(END) Dow Jones Newswires

January 18, 2019 10:11 ET (15:11 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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