State Street Corp., long one of Boston's most stable financial employers, has been cutting staff as the economy faltered. Now it's facing further trouble after a string of write-downs erased most of its profit in the fourth quarter and the bank disclosed an additional $9.1 billion in unrealized losses on various investments.
Some analysts expect State Street to raise additional capital. This explains why it's looking to cut costs including personnel. The firm said Dec. 3 it would cut between 1,600 and 1,800 positions by the end of the first quarter.
"As we previously announced in December, we have initiated a reduction in force that is taking place throughout the first quarter," says Arlene Roberts, a company spokeswoman.
Two-thirds of the affected workers are in North America. State Street did not specify which departments its targeting. The reductions will largely be achieved by consolidating middle and senior management ranks, Roberts says.
For recruiters in the Boston area, those cutbacks are a sign of the times. Last year, Bank of New York Mellon Corp., the largest custodial bank, cut its staff by 1,800 and Fidelity Investments slashed 3,000 jobs. The final total at State Street is difficult to predict.
Tom Barao, of Boston Advisory Partners, says State Street's underlying business remains strong. For now, his firm has not seen an increase in resumes from State Street employees.
"They have been looking at their business model and are trying to figure things out," he tells eFinancialCareers News. He adds that he "can't remember them having major cuts" before.
Indeed, State Street continues to advertise job openings. Charles O'Neill of Diversified Management Resources of Cambridge, Mass. points out that it's not unusual for companies to cut staff in one area and add in others.
"I can't predict what State Street will do next, but I do not think we've seen the last of the job cuts in the money management industry," he says.