Morning Coffee: Bank that paused layoffs for the pandemic revs them up again. Jamie Dimon's controversial compensation
Is State Street a bank? Sort of, to the extent that it describes itself as "being at the heart of financial services" and has researchers and traders and investment managers and custody and analytics services. No, to the extent that there are no M&A bankers, capital markets people or wealth managers there. Still, State Street describes itself as a 'bank holding company', and only a few weeks into 2021 it's kicked off a biggish round of cuts.
State Street's cuts are the sorts of cuts that come with a waft of kindness. Institutional Investor spoke to Brendan Paul, a spokesperson for the firm, who said the bank is doing its best to find people something else internally. State Street has built an internal talent network, said Paul. They could be redeployed through that.
Still, after "suspending headcount reductions through 2020 in order to provide our employees with some security during a time of tremendous economic uncertainty,” State Street is cutting again. It's not cutting in the style of HSBC, with its 35,000 eliminations, but it is separating itself from 1,200 people. Most of them seem to be middle managers. Automation, process reengineering, and the urge to save money are to blame. Those who don't get recycled by the internal talent network can expect some pleasant payoffs: State Street's set aside $82m for employee severance charges, which works out at $50k a head if it goes to the 1,200.
State Street isn't the only one making cuts. Goldman's removing another $300m from its markets business this year; HSBC had barely begun its chopping odyssey in October; Deutsche Bank resumed its program in the middle of last year. However, State Street is the first to resume a cost-cutting agenda that was paused in 2020. Will others follow? At one point it seemed like this year could be littered with pre-bonus layoffs, now that looks a lot less likely.
Separately, Jamie Dimon's compensation is causing a fuss. It's not the fact that he's been paid $31.5m, which is flat on last year even though JPMorgan's net income fell 20%. It's the fact that he got $31.5m while decrying income inequality. Earning tens of millions without a whiff of hypocrisy is best achieved by being an ardent meritocrat, or simply reveling in the enormity of your wealth like the "highest earning person in the world in finance," Mike Platt.
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