Boston-based StateStreet Corp. executives are committed to resolving the issues the FederalReserve and FDIC found in the bank's living will process, Chairman and CEO JosephHooley said on an April 27 earnings call.
The agencies foundthe bank's living will to be "not credible," with deficiencies in itsoperations, legal entity rationalization, capital and liquidity. The bank has untilOct. 1 to remedy its plan.
CFO Michael Bell said while it is too early to give specifics,"there's likely to be some additional infrastructure to be built," includingmodeling and monitoring capabilities and additional legal entity simplification.
He added that he did not expect any of the plan's deficienciesregarding capital to have an impact on the company's Comprehensive Capital Analysisand Review.
Bank executives also reiterated on the call that they are expectingto save $100 million in expenses in 2016 through its State Street Beacon initiative,despite increased regulatory costs and new business expenses resulting from itsacquisition of The bankcontinues to focus on becoming a "digitalleader" and expects to generate $550 million in annual pretax netrun-rate expense savings by the end of 2020 as a result of the initiative, Hooleysaid.
The bank has a number of pilot projects aimed at using blockchainto digitize State Street firms linked to other organizations, he said. But in orderfor financial technology such as blockchain to work, "the industry needs todigitize," he said.
State Street reportedfirst-quarter net income available to common shareholders of $319 million, or 79cents per share, compared to $373 million, or 89 cents per share, in the first quarterof 2015. On an operating basis, the company recorded net income available to commonshareholders of $396 million, or 98 cents per share. The S&P Capital IQ consensusnormalized EPS estimate for the recent quarter was 90 cents.