State Street Corp. is preparing to lay off staff, a plan revealed about a month after media reports that the firm is considering a sale of its asset management business.
During an earnings call on January 19, State Street’s chief financial officer said that the firm is eliminating about 1,200 positions, mostly in middle management. Last month, Bloomberg and the Wall Street Journal reported that the firm was exploring options for its State Street Global Advisors, including a possible sale of the more than $3 trillion asset manager to UBS Group.
The roles State Street plans to eliminate are primarily a result of changes to its operating model and business process, as well as automation, Brendan Paul, a spokesperson for the firm said in an email Wednesday. According to Paul, the employees whose roles have been eliminated will be entered into State Street’s talent pool and may be “redeployed” to new roles.
“At the onset of the pandemic, we committed to suspending headcount reductions through 2020 in order to provide our employees with some security during a time of tremendous economic uncertainty,” Paul said. At that time, the company built an internal talent network, which helped to keep more than 3,000 employees working for State Street in 2020, Paul said.
State Street expects to spend $82 million on employee severance charges, its financial highlights report shows.
During the earnings call, State Street’s president and chief executive officer Ronald O’Hanley declined to comment on “market rumors,” but he did say that the firm’s asset management business is strong thanks to organic growth.
“We see the world evolving, and therefore we need to think about how to add capabilities, both product and distribution capabilities, or distribution access to this,” O’Hanley said. He added that the firm would “continue to look at inorganic activities” for State Street Global Advisors.
Paul declined to comment on a possible sale of the asset management business.
State Street’s $2.9 billion in revenue in the fourth quarter was four percent lower than the same period in 2019, according to its financial highlights report.
The firm’s assets under management increased 11 percent from the fourth quarter of 2019 to $3.47 trillion, thanks to inflows into State Street’s exchange-traded funds and cash accounts, as well as strong market performance, according to the financial highlights report.