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State Street to lay off 15 percent of senior managers

State Street Corp. is reportedly cutting 15 percent of its senior management beginning Wednesday as it continues to tackle costs. Bloomberg

Three years ago, State Street Corp. told investors it would eliminate as many as 7,000 jobs by 2020. Last month, just weeks before he would take over as CEO, Ronald O’Hanley made clear that the Boston-based company’s cost-cutting campaign was not over.

In a presentation to investors in New York, O’Hanley said the financial services giant would shrink its senior management ranks by about 15 percent, part of a broader plan to reduce “structural expenses” — including compensation, benefit, occupancy, and other costs — by 2 percent to 3 percent a year. Other steps will include increased use of automation and streamlining the company’s worldwide operations.


Spokesman Marc Hazelton declined to comment on the presentation by O’Hanley, who was then State Street’s president and became CEO when Jay Hooley stepped aside at the end of the year. Hazelton wouldn’t say how many senior managers the company has, though the number is believed to be in the hundreds.

The company, which provides custodial services for investors and manages $2.8 trillion in client investments, has about 12,000 employees in Massachusetts, mainly in Boston and Quincy, and 36,000 worldwide. Bloomberg reported on the layoff plans on Wednesday.

State Street has said it would lower annual expenses by $550 million by deploying technology to handle more of the work now done by employees, an effort known as Project Beacon. Many lower-skill jobs have been moved overseas or eliminated.

In his New York presentation, O’Hanley noted the impact on employment of the company’s automation drive.

“When you do that, one, you’re simplifying the way business gets done at State Street,” he said, according to a transcript. “But two, you just don’t need as many top-end senior managers to get the work done.”

Last January, Hooley said Project Beacon would wrap up by the middle of this year, rather than late in 2020.


State Street’s custody business, which keeps track of $34 trillion assets for hedge funds, mutual funds, and other institutions, is a high-volume, low-margin operation, with fees continually under pressure. The company’s asset management arm, State Street Global Advisors, also has been squeezed by pricing pressure on index funds.

The company’s stock has lagged behind competitors and the overall market amid lackluster financial results, uncertainty about O’Hanley’s ability to jumpstart growth, and disappointment with Hooley’s acquisition of Charles River Development for $2.6 billion.

The shares lost 34 percent in the past year, compared with a 14 percent decline by larger rival Bank of New York Mellon and a 6 percent loss by the Standard & Poor’s 500 index.

In an interview with the Globe last month, Hooley, who remains chairman, said it was necessary for State Street to embrace technology, even at the expense of jobs.

“You can sit back and let technology disrupt you, or you can embrace technology and disrupt yourself, and move yourself to the next phase of growth,” he said. “That’s what I would like to believe State Street has underway.”

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