State Street to lay off 400 employees, 145 in Mass.<br/>
State Street Corp. said it will lay off 400 people this year, in its latest round of job cuts aimed at trimming costs. The action will affect 145 employees in Massachusetts, or 1 percent of the local head count, the company said.
The Boston-based financial services giant announced the job cuts as it reported first-quarter profits of $356 million, which were 22 percent lower than earnings from the same period a year ago. Revenues rose about 1 percent to $2.5 billion.
The new layoffs are the fourth round of job cuts at State Street since 2010. All the layoffs combined eliminated a total of 2,960 jobs.
State Street said it took a pre-tax charge of $72 million in the latest quarter for severance costs related to the staff reductions, which the company said were meant "to realign our expense base in response to the current environment.''
The company's chief executive, Joseph "Jay" L. Hooley, said in a statement that the company was "responding to the challenges presented by low interest rates.'' Last year, Hooley's total compensation increased 29 percent to $15.5 million.
State Street is one of Boston's largest employers, but its local workforce has been shrinking. It has about 11,300 employees in Massachusetts — down from 12,000 in early 2013. In other parts of the world, the company's jobs have grown to 18,300, from 18,000 a year ago.
Gerard Cassidy, a managing director at RBC Capital Markets in Portland, Maine, who has followed State Street for many years, said the earnings fell below investors' expectations. Shares fell nearly 3 percent to $60.79 Friday.
"What you're seeing — not just at State Street but throughout the industry — is they're being forced to become more efficient. And efficiency comes with layoffs,'' Cassidy said.
Whereas in the past, banks would often acquire competitors and cut costs and jobs as part of those transactions, fewer such deals are occurring these days, Cassidy said. And so, "The banks are being forced to eat their own.''
State Street manages investments and is the largest handler of accounting and record keeping for pension funds and mutual funds. In recent years, the company has had layoffs nearly annually.
Earnings per share for the quarter declined 17 percent, to 81 cents. That includes an 11 cent charge for costs related to the staff reductions.
The company said it expects the job cuts to generate pre-tax savings of approximately $40 million on an annualized basis in 2015.