Chicago’s Old Lady, Northern Trust Corp. (NTRS), the third- largest independent U.S. custody bank, will eliminate about 700 jobs to join its biggest rivals Bank of New York Mellon Corp. and State Street Corp. (STT) in cutting costs as record-low interest rates hobble profit.
The move brings cutbacks made or planned by custody banks over the past 13 months to 4,450. BNY Mellon, the largest custody bank, said last year it would eliminate 1,500 positions, and State Street has planned 2,250 job cuts since November 2010.
The Federal Reserve’s decision to keep its main lending rate close to zero has eroded margins on lending and investments for custody banks and forced them to waive fees on money-market funds. Volatility in global equity markets, which fell 9.4 percent in 2011 as measured by the MSCI ACWI Index, also hurt profit. State Street fell 7.9 percent to $39.37 at 10:17 a.m. in New York trading, the most since Aug. 8. Shares of BNY Mellon (BK) dropped 3.6 percent to $20.51 and Northern Trust declined 2.2 percent to $41.
Net income at Northern Trust and BNY Mellon tumbled in the fourth quarter as both companies booked restructuring costs associated with expense-cutting measures…..
Read more at http://www.bloomberg.com/news/2012-01-18/northern-trust-plans-to-cut-700-jobs-as-low-interest-rates-hobble-profit.html
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