State Street plans 1,500 job cuts and senior management scale back

New State Street chief executive, Ron O’Hanley, begins the year by announcing job cuts in earnings release.

State Street has said it will reduce its senior management by 15% in 2019, along with 1,500 employees as part of a new expense program.

The move came as new CEO, Ron O’Hanley, delivered his first quarterly earnings presentation. State Street said the loses would occur in “high cost locations” as the bank realises benefits of “automation and standardised global processes”.

In addition, the firm added there will be a reduction of senior managers by 15% through “management delayering and aligning global organisations”. The custodian made the announcement in its earnings statement, claiming that it expects to realise $350 million in underlying expense savings in 2019.

“Staffing assessments were recently done as part of our shift to a more globalised model and we are now able to take further advantage of automation, and standardised processes and lower cost per person,” Eric Aboaf, State Street’s chief financial officer, told investors.

O’Hanley, previously vice chairman of State Street and president and CEO of State Street Global Advisors, assumed the role at the start of the New Year. He joined State Street in 2015 and before that was president of asset management & corporate services for Fidelity Investments, responsible for all Fidelity asset management organisations and Fidelity’s corporate functions and enterprise technology.

In October, State Street closed its acquisition of front office services provider Charles River Development for $2.6 billion, with the bank’s  former head of the Global Exchange business leading the company as CEO.

O’Hanley added on the earnings call that State Street has been encouraged by the continued interest in Charles River, with a total of 98 client engagements since the deal was first announced.

“We continue to be excited by the [Charles River] acquisition, we’re pleased with its performance and remain confident in our previously announced revenue and cost synergies,” he said.