December 15, 2008 / 6:12 PM / 11 years ago

UPDATE 2-Northern Trust to cut about 450 jobs

* Cuts amount to 3.7 percent of work force

* Shares ease 1 percent, outperform peers

* Company faces tough environment, says analyst (Adds analyst comment, stock price)

BOSTON, Dec 15 (Reuters) - Northern Trust Corp (NTRS.O) will cut about 450 jobs, or 3.7 percent of its work force, the U.S. trust bank and asset manager said on Monday, joining its rivals in shrinking staff due to tough market and economic conditions.

Northern Trust, which provides private banking, investment management and global custody services, said it expects a pretax charge of $20 million to $25 million, or 5 cents to 7 cents a share, in the fourth quarter related to the cuts and other costs.

The cuts, which will start in the New Year, are expected to generate $50 million to $60 million in annual pretax savings and will not impact client services, the company said in a statement. A Northern Trust spokeswoman said the firm had 12,100 staff as of Sept. 30.

Rival trust banks and asset managers State Street Corp (STT.N) and Bank of New York Mellon (BK.N) have both announced cuts of 1,800 jobs.

Northern Trust is among the banks that have received funds under the U.S. Treasury Department’s finance industry rescue package, which is intended to shore up balance sheets in response to the credit crisis.

Some analysts viewed Northern Trust’s job cuts favorably but said market conditions would weigh on the firm.

“We like the fact that management is being proactive with expenses and view this as a positive. However, at this time, it is hard for us to get more bullish on the stock,” Sandler O’Neill & Partners wrote in a note to clients.

The research firm maintained its “hold” rating on Northern Trust’s stock but lowered its 12-month price target by $9 to $50 and cut its fourth-quarter 2008 and full-year 2009 earnings estimates.

Northern Trust shares were off 48 cents, or 1 percent, at $45.31 in afternoon trading on the Nasdaq, outperforming a 1.7 percent fall in the Standard & Poor’s asset management and custody banks index .15GSPAMCB. (Reporting by Muralikumar Anantharaman in Boston and Eric Yep in Bangalore; editing by John Wallace)

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