State Street said it will cut 5 percent of its work force, as it accelerates its investment in new technologies such as "private processing clouds."
The company said it is "developing new methods and tools to accelerate the pace of innovation and the introduction of new services and solutions" to support global growth. By some measures, State Street is the world's third largest custody bank.
The new initiatives follow programs to "transform business processes and create efficiencies across the company,'' already enacted, it said. These include "lean methodologies," centers of excellence in different technologies and processes and 24 by 7 operations supporting client services.
State Street said it "will provide appropriate separation packages including outplacement services" and also try to cut the office space it uses by exercising "early buy-outs, lease terminations, or certain sublease arrangements." In addition, State Street will look at "alternative work arrangements."
The company expects to recognize restructuring costs of approximately $400 million to $450 million over four years, beginning in the fourth quarter of 2010. It expects "slight pre-tax cost savings" in 2011. By 2014, the annual savings should be roughly $600 million.
The global growth included the acquisition this year of Intesa Sanpaolo's securities services business and Mourant International Finance Administration, and recently announced its agreement to acquire Bank of Ireland Asset Management. The company's stated goal is to double its non-US revenues over the five-year period ending in 2014.
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