State Street sees loss as it shifts portfolio
State Street Corp
The company said it would record an after-tax loss of $350 million for the quarter, but operating earnings are still expected to top year-earlier results.
State Street, which manages $2 trillion and has about $20 trillion in assets under custody, plans to sell $11 billion of U.S. non-agency mortgage-backed securities and asset-backed securities and non-U.S. mortgage-backed and asset-backed securities.
The sales are seen as part of State Street's effort to return to its more conservative roots under a new chief executive. Its recent troubles forced management to cut costs through layoffs and by slashing the dividend in early 2009. Joseph Hooley took over as CEO in March.
State Street said the securities sales will increase its balance sheet flexibility in deploying its capital, shore up its capital ratios under evolving regulatory capital standards, and reduce its exposure to certain asset classes.
The company previously said the after-tax, unrealized mark-to-market losses in its investment portfolio, which had worried investors in recent years, had shrunk to $281 million in the third quarter, down 72 percent from the second quarter.
(Reporting by Svea Herbst-Bayliss; editing by John Wallace)
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