“(Reuters) – Weak foreign exchange revenue persists at State Street Corp , hurting the custody bank’s chances of lowering its high ratio of compensation expenses, top executives said on Tuesday.
Some shareholders, including activist investor Nelson Peltz, have criticized State Street’s compensation-to-revenue ratio, saying it is too high.
State Street’s goal is to keep the ratio at about 39 percent, compared with 40 percent in 2011. But that goal could be hard to meet as foreign currency trading revenue withers from slack volume and volatility while key customers shift away from transactions with higher profit margins.
State Street Chief Financial Officer Ed Resch said on Tuesday he expects the compensation-to-revenue ratio to be pressured, primarily because of weak trading revenue. He made his remarks during a presentation with State Street Chairman and Chief Executive Jay Hooley at the Bank of America Merrill Lynch Banking and Financial Services Conference in New York.
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