In her 29 years at Northern Trust, Jana Schreuder has been part of a global expansion that turned the Chicago-based family trust-asset and custodial institution into a global wealth-management and institutional lending powerhouse. But no episode challenged the 51-year-old president of the bank's operations and technology unit more than what happened in the days heading up to the demise of Lehman Brothers.
As the securities lending market collapsed, Schreuder's team had to burn the midnight (and weekend) oil with the bank's credit analysts, lending teams, accountants, and custodial-services leaders to advise clients, many of whom were looking to reduce exposure as quickly as possible. Northern Trust operations staffers, some through makeshift work-at-home setups, were pricing asset holdings and portfolios in the days leading up to the Lehman bankruptcy, as the bank prepped for record levels of cash and securities transactions that would follow. Work that normally took weeks, if not months, was being compressed to hours, "so we could assess a whole new situation that was occurring before our eyes," Schreuder says. "Not your typical operations role."
The quick-turn delivery of client positioning strategies led to an early default call against Lehman that liquidated collateral, and limited the total exposure to Lehman securities to well under 1 percent of assets under management, according to the bank.
That didn't stop all the pain, as some client lawsuits ensued over securities lending losses, and investors punished Northern Trust in a stock plunge that took share prices from $88.52 in September 2008 to less than $34 two months later. The stock had bounced back to around $60 as of mid-September, thanks in large part to strong second-quarter earnings. Net income jumped 46 percent to $314 million, due in large measure to a rebound in securities lending, according to president and CEO Fred Waddell. Its assets under management stood at $559 billion on June 30, and its custodial assets topped $3.2 trillion.
Some of income gains this year are due to reduced expenses, part of which came from Schreuder's cost-cutting initiatives that centralized processing operations (without a net loss in IT professional staffing levels) in Chicago and Bangalore, India.