
State Street to Lay Off 5% of Workforce
NEW YORK (
) --
State Street
(STT) - Get Report
said late Tuesday it plans to lay off 1,400 employees, roughly 5% of its total workforce, as part of a major restructuring program.
The Boston-based bank described the cuts as "targeted staff reductions" and said the first layoffs would occur in December with the program expected to be "substantially completed" by the end of 2011.
The affected employees will receive "appropriate separation packages including outplacement services," State Street said.
Other aspects of the restructuring, which the bank expects to yield annual pre-tax run-rate expense savings of $575 million to $625 million by the end of 2014, include investments to improve technology and business processes and taking steps to lower real estate occupancy costs, such as early buy-outs and lease terminations.
State Street expects to record charges related to the restructuring totaling between $400 million and $450 million over a four-year period. It estimates it will record between $160 million to $165 million worth of these costs in the current fourth quarter.
Shares of State Street closed Tuesday at $43.20, down 1.1%. Year-to-date, the stock is up incrementally; although it's fallen more than 11% since hitting a 52-week high of $48.80 on April 13.
State Street, which had almost 29,000 employees as of Sept. 30, reported its fiscal third-quarter results on Oct. 19, posting a profit of 86 cents a share on revenue of $2.15 billion. The bottom-line performance was ahead of Wall Street's expectations for a profit of 83 cents a share but the revenue total fell short of the $2.19 billion consensus estimate.
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Written by Michael Baron in New York.
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