State Street Corp., the stalwart financial institution headquartered in Boston, has set the stage for a significant workforce reduction. The company is looking to cut about 1,500 jobs, a move that is expected to save costs but also raise tensions among employees during the holiday season. "We expect to take a charge in the fourth quarter of approximately $175 million to $200 million attributable to severance costs, primarily related to about 1,500 headcount reductions," Eric Aboaf, State Street Vice Chairman and Chief Financial Officer, stated in a presentation at the Goldman Sachs U.S. Financial Services Conference on December 6, as reported by Pensions & Investments.
The anticipated cutbacks, while discoursed in New York, will have impacts that ripple globally across the company's approximate 42,000-strong workforce, according to details shared by a spokesperson in the wake of the announcement. Revealing the comprehensive nature of the transition, this spokesperson noted the layoffs are part of a "multiyear transformation journey to drive increased productivity and create efficiencies." Said spokesperson told the Boston Globe, “While we have added employees in distinct areas and business functions, we must now position ourselves for long-term success and take difficult but necessary steps to further streamline our organization.”
Shares of State Street responded to the news with resilience, climbing approximately 1.2 percent as of today in the afternoon, implicating that investors might be in favor of the cost-cutting strategies being implemented. State Street boasts a market cap of nearly $23 billion after weathering various economic storms and undergoing a headquarters move to a 43-story office tower at One Congress, where it now occupies 27 floors.
Just months after enforcing a stricter office attendance policy, requiring employees to come in four days a week, State Street is bracing for a leadership facelift. Louis Maiuri, a current executive with a decade-long career at State Street, will retire early next year. As told by the Boston Globe, Ronald O'Hanley, CEO and chairman, is poised to take on additional roles in the wake of Maiuri's departure, while Mostapha Tahiri gears up to ascend to the chief operating officer position.
In addition to the challenges of restructuring, Aboaf spoke of international consolidations meant to prop up the company's footing: "We're streamlining our operations in India and have now assumed full ownership of our India operations joint venture with the Atos Group." Aboaf remarked, signaling a similar intent with regard to another joint venture with HCLTech, as outlined by Pensions & Investments. The company sees these consolidations as significant levers to unlock future productivity and operational improvements globally, a notable ambition given their $3.7 trillion assets under management.
