BOSTON, March 1 (Reuters) - 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 said.
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)