State Street defiance goes only so far ©Daniel Lynch Jay Hooley, chief executive State Street: the bank is in its third round of restructuring in two years State Street's management is plotting acquisitions - even after shareholder angst about the execution of previous deals - and vowing not to settle customer lawsuits over currency transactions. However, the defiance only goes so far. Jay Hooley, chief executive of the custody bank, is emphasising cost-cutting, job losses and organic growth, all in the pursuit of improved margins, during an investor meeting and an interview with the Financial Times last week. One of State Street's largest shareholders is Trian Partners, the activist investment vehicle for Nelson Peltz, Edward Garden and Peter May, and they have pressured the bank to improve profitability, expressing concern that acquisitions have burdened the company with too large a cost base. Amid widespread discontent, four of the largest shareholders last year agitated for management change and Edward Resch, chief financial officer, announced his retirement shortly afterwards. State Street is in its third round of restructuring in two years, with a big technology project under way to shift to the use of what it calls a "private cloud," and 2,900 job cuts, or about a 10th of its workforce. Mr Hooley says it was a "natural opportunity" to acquire custody businesses from European banks to follow his 2009 acquisition of a securities servicing business from Intesa Sanpaolo, the Italian bank. But he added that Europeans remained too fearful of a fresh crisis to lose such a funding source. "If you are a bank, particularly a European bank, it trumps what you could get from selling the asset, so until you see sustained stability . . . you are unlikely to see banks sell," Mr Hooley says. The bank is fighting a downturn in some of its businesses related to market activity, such as securities lending and foreign exchange trading, that he expects to recover. Re-risking, it is happening, we see it, the question is will there be follow through? Securities lending, where investors such as pension funds lend out their holdings to hedge funds, is at half the level it was at the peak of the market. "It's likely that you'll see a little more leverage in the system," he says. If we are at half of where we were before, could we get half of that back? That doesn't seem unreasonable. In foreign exchange, he says there are similar cyclical factors affecting revenues, but also some structural factors. State Street and its peers face suits from several states on behalf of pension funds that believe they were unfairly charged for currency transactions. "The trust banks haven't been perfect over the course of time," says Mr Hooley, and the lawsuits have caused clients to look at the way they trade currencies. However, the chief executive says that he has no intention of settling any of the foreign exchange litigation grinding through the courts. "The dispute largely revolves around disclosure," says Mr Hooley, and "we felt good about the transparency and disclosure back in 2009 when all this came about." For us its principle and precedent, we don't think we did anything wrong, and so we need to defend ourselves.