Chicago-based Northern Trust, its earnings pressured by record low interest rates, said Friday it is laying off 500 people from its worldwide staff.
The reductions represent about 2.5% of the bank’s global headcount of 20,700 employees. Spokesman Doug Holt did not say how many of the cuts will be in Chicago, where he said Northern Trust had 6,500 people working at the end of 2020.
“Given current market conditions, we are compelled to make a number of difficult staffing decisions,” Holt said. “These decisions are designed to ensure our resources are being used in the most prudent manner to meet our clients’ needs and execute on our long-term strategic priorities. The reductions are global.”
Most of the layoffs will occur early this year, he said.
The bank’s chairman, Michael O’Grady, disclosed the layoffs in a Jan. 7 email to employees that also sought to temper expectations about bonuses and pay hikes. O’Grady said bonuses will “decrease meaningfully” and base pay increases will be “very modest,” if not absent, for many employees.
The newsletter Wolf Street Report first published the layoffs and contents of O’Grady’s email. A person familiar with the email confirmed its contents; Northern Trust declined to provide a copy to the Sun-Times.
“Despite healthy equity markets, our company faces the headwinds of continued lower interest rates, which reduced our earnings in 2020 and will put pressure on our profitability this year,” O’Grady told employees.
The company is due to report its fourth-quarter earnings Thursday. For its third quarter, it posted a 23% drop in its net income, to $294.5 million, compared with the same period in 2019. O’Grady at the time blamed the result on a “challenging interest rate environment.”
Northern Trust is the nation’s third largest bank in the business of fiduciary management, or handling assets for institutional investors. It also is a leader in wealth management for families and corporations.