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Rating:State Street to Cut Another 1,800 Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, April 11, 2003

State Street to Cut Another 1,800

by: Sean Hanna, Editor in Chief

State Street is well known in the financial services industry for running a tight ship as it has put together decades of strong growth in both its top and bottom lines. Yesterday, the Boston-based firm admitted that it may be facing a loss when it unveiled plans to cut another 1,800 jobs from its workforce. The new cuts are in addition to 1,000 it announced after buying Deutsche Bank's GSS investment services division last November. Both rounds of cuts are related to the acquisition.

The latest round of cuts will come through voluntary early retirements and enhanced severance deals being offered to employees in the newly acquired GSS unit. The last round of cuts hit employees in the Nashville and Jersey City offices of the firm. The new round is expected to also effect workers in Quincy , Massachussets and Boston. The bank may start to implement them as soon as June.

"We are positioning State Street for improved profitability," said David A. Spina, chairman and chief executive, in a statement. He added that the layoffs and other undisclosed cost reductions would result in a pretax charge of between $125 million and $175 million. The cuts will also reduce the banks ongoing operating costs by an estimated $55 million a quarter.

He expects the charge to knock anywhere from $0.25 to $0.35 per share from the bank's earnings. The charge raises the possibility that State Street will report a loss for the quarter. Last month the bank said it expected to earn between $0.27 and $0.29 during the quarter. 

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