State Street to cut IT spend

State Street to cut IT spend

State Street CEO Ron Logue says the firm has developed an "aggressive" set of policies to manage headcount and related IT expenses over the coming year.

Speaking at a Merrill Lynch conference last month, Logue said the business would look to use more IT contractors and cut back on its $1.3 billion technology budget in 2009.

With IT spending responsible for up to a quarter of State Street's operating expenses, Logue said the budget could be "materially" limited, although he didn't go into detail on planned cuts. Similarly, a greater reliance on contractors would provide "flexibility" in expenses management.

State Street recently applied for $2 billion from the US Government's recapitalisation programme, although in an interview with the FT last week, the firm's president and chief operating officer Jay Hooley strongly intimated that the extra cash would be used as part of a consolidation war chest to snap up weaker custodian banks operating in the European markets.

State Street has questioned the FT's interpretation of this interview and issued its own clarification: "Given our role as a custodian, we intend to use the TARP funds to provide additional short-term liquidity to the financial markets and specifically to our customer base consisting primarily of institutional investors."

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