Hunt out of State Street

4 January 2008

William Hunt, asset management chief of US financial giant State Street, has resigned after the sub-prime mortgage crisis was too much for the group to sustain.

In addition State Street announced a $279 million post-tax charge to cover any legal costs that it might incur.

Just weeks before, State Street announced that four of its off-balance-sheet vehicles had $29.2 billion of asset-backed commercial paper in their coffers.

Mr Hunt is not leaving empty-handed, taking away a package of $14.1 million in severance pay and benefits plus $5 million in stock and retirement benefits.

Although State Street is the first financial institution to see the departure of a top executive this year, analysts say that more heads are likely to roll and more firms may set aside money for legal costs.

Based in Boston, State Street has been asked for answers since last fall about investments in risky vehicles in light of the credit crunch.

The world's largest institutional money manager's chairman and chief executive, Ronald Logue, was quoted in the Financial Times as saying: "Some of our customers that were invested in the active fixed-income strategies have raised concerns that we intend to address."

Mr Hunt is being replaced by James S Phalen until a new appointment is made.

Despite the news, shares in State Street rose $6.49, the equivalent of 8.2 per cent, to close at $85.37 in New York trading.

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