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State Street to cut jobs as it drives for efficiencies

Cost cutting aheadState Street is axing 600 staff globally to save $50 million (€45.3 million) as part of a wider cost-saving drive, the firm has said.

Last week the asset manager and custody bank announced a decline in the assets of both businesses.

State Street’s quarterly statement showed the firm had made a $75 million payment in pre-tax severance costs related to staff reductions during the third quarter (Q3) – a measure taken to “better calibrate the company's expenses to the current environment”.

The staff cutbacks will finish by the end of 2016 and the net fall in headcount at the company will be 200.

Assets under management in Q3 fell 7.2% to $2.2 trillion, and assets under custody and administration fell 4.8% to $27.27 trillion.

Its asset management business saw net outflows of $29 billion, but the custody business saw new asset servicing mandates of $141 billion in the quarter.

The firm said it was accelerating the next phase of a transformation programme that aims to generate a total of about $500 million in annualised savings.

Joseph L. Hooley, State Street's chairman and chief executive officer, said: "This quarter’s results reflect the decline in equity valuations globally, particularly in emerging economies and combined with the continued low interest rates and the strength in the US dollar, negatively impacted our revenue.”

He added: “In light of the continued challenging environment we are accelerating the next phase of our transformation programme to create cost efficiencies and to further digitise our interfaces with our clients in order to deliver more value.

A business operations and information technology transformation program has already delivered more than $625 million in annualised savings, says Hooley.

State Street has been returning capital to shareholders and in Q3 purchased about $350 million of common stock.

Third quarter earnings per share was $1.16 on revenue of $2.6 billion.

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