BNY Mellon will cut its work force by 3%, or 1,500 positions, by year's end, as it sees expenses growing faster than revenue.
The cuts will come by year end, after a review by all businesses of the composition of its global workforce of 48,900, spokesman Kevin Heine said.
The announcement of the cuts comes less than a month after the company posted solid earnings growth.
The provider of asset servicing, issuer services, clearing services and other investment services reported second quarter net income of $735 million, up from $658 million a year ago and $625 million in the first quarter of 2011.
"Over recent quarters, BNY Mellon has succeeded in building positive revenue momentum. However, expenses have been growing unsustainably faster," said Robert P. Kelly, BNY Mellon chairman and chief executive officer.
In the past year, revenue has grown 19.6 percent, to $3.1 billion in the second quarter of this year. But staff, professional, legal, software and other “noninterest” expenses have risen 21.2 percent (see chart).
Jobs are not the only target for expense reductions. The company also expects to rationalize technology picked up in a series of acquisitions in recent years, most notably the $2.3 billion purchase of the Global Investment Servicing Business of PNC Financial Services Group.
In the company’s second quarter earnings call last month, Chief Financial Officer Thomas Gibbons said:
There is some low-lying fruit. I mean, if you think about it, we've gone through a number of acquisitions over the past 3 or 4 years. So when we go back and reflect on our technology infrastructure, there's quite a bit we can attack there. We've got too many desktop configurations just the nature of our business model, and we're going to go after that. We also have some applications dating back to the Mellon Bank of New York merger, which we think we can sunset too, and we also for the first time are really looking at combining some of our common operations not just within asset servicing, but even across some of our different businesses.
BNY Mellon is not planning to offer any voluntary departure packages, Heine said. Instead the company will rely on “natural turnover” and an immediate hiring freeze to hit its job cuts target.
The company also expects to reduce its use of temporary workers, consultants and contractors.
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