| BOSTON, March 1
BOSTON, March 1 State Street Corp., one of the
world's biggest players in the business of restructuring
investment portfolios, is shutting its transition management
operations in London and Hong Kong and eliminating 20 jobs.
"We're restricting the transition management business
globally with the aim of streamlining infrastructure, creating
efficiencies and taking greater advantage of centralizing
processing and trading," State Street spokeswoman Anne McNally
Boston-headquartered State Street does not say how many
people work in transition management worldwide, noting only that
2,300 people work in its London office and that 534 people work
in the Hong Kong office. Globally the company employs 33,000.
The jobs will be eliminated in the second half of the year,
McNally said, adding that transition management teams based in
Boston, Sydney and Singapore will service, trade and settle
transactions for State Street clients.
The transition management business has fallen on tough times
in the last years as investor tastes have shifted to passive
from active portfolios and some large asset owners have opted to
stop using outsiders' services.
In the last four years, Bank of New York Mellon,
Credit Suisse and J.P. Morgan have all exited the
low-margin transition management business.
State Street's decision to shrink its operations comes only
weeks after the company agreed to pay $64.6 million to the U.S.
Department of Justice and U.S. Securities and Exchange
Commission to settle criminal and civil charges that accused it
of having schemed to add secret commissions on trades performed
for six clients.
State Street reimbursed the six clients, fired the employees
involved in the matter and implemented stronger controls.
In April 2016, prosecutors indicted two ex-Street Street
executives, Ross McLellan, a former executive vice president,
and Edward Pennings, a former senior managing director in the
bank's London office. Prosecutors charged that from 2010 to 2011
the men conspired to add the secret commissions.
(Reporting by Svea Herbst-Bayliss; Editing by Alistair Bell)