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State Street to Shrink Operations in London & Hong Kong
Per a Reuters report, State Street Corporation (STT - Free Report) has decided to shut its transition management operations in London and Hong Kong, with a goal to streamline its operations and improve efficiency. Also, the move will lead the Boston-based company to cut 20 jobs.
One of the major reasons behind this move is that, over the last few years, most of the investors have started preferring passive management to active management. As a result, many large asset owners no longer wish to avail the services of such sell-side institutions to manage their portfolios.
Anne McNally, a spokeswoman for State Street said that the company plans to cut jobs in the second half of 2017. She further added that, going forward, the transition management teams in Boston, Sydney and Singapore will help in the service, trade and settlement of transactions for State Street’s clients.
Being one of the biggest companies to restructure investment portfolios, State Street currently employs around 33,000 people globally. However, it does not provide an exact figure for the number of people working in the transition management worldwide.
Since the transition management business is no longer significantly profitable, companies like The Bank of New York Mellon Corporation (BK - Free Report) , Credit Suisse Group AG and JPMorgan Chase & Co. (JPM - Free Report) have also exited the business in the last few years.
Shares of State Street have increased 17.1% in 2016, underperforming the 19.4% gain for the Zacks categorized Major Regional Banks industry.
We believe that though State Street is likely to see its profitability getting hampered due to rising expenses, it is set to capitalize on future growth opportunities based on its sturdy capital position.
Currently, State Street carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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