State Street Buys Securities Services Unit in Italy
December 22, 2009
Global custody giant State Street Corp. on Tuesday said it will buy the securities services business of Italy’s Intesa Sanpaolo SA for $2.5 billion.
About 555 employees of Intesa are expected to join State Street when the deal closes in the second quarter of 2010.
“Today’s acquisition represents a significant milestone in State Street’s strategy to become a truly global provider,” said chief executive Ronald Logue said, in a prepared statement.
Intesa, Italy’s second largest bank, said its securities services unit will have about $450 milllion in revenue and $180 million net income this year. The unit has offices in Italy and Luxembourg.
The bank said that about $1.9 billion of the takeover price corresponds to “goodwill value.”
Overall, Intesaoversees about $525 billion in assets under custody and administration. The institution offers global custody, correspondent banking and fund administration.
With $13.3 trillion in custody assets as of Sept. 30, State Street, based in Boston, ranks third in custody assets behind Bank of New York Mellon Corp. and JP Morgan Chase in New York.
With $1.74 trillion in assets, State Street’s Global Advisors unit is considered the second largest money manager behind New York-based BlackRock Inc.
Logue said in October that he was looking to expand State Street presence overseas by buying asset-servicing businesses outside the U.S. Logue plans to retire in March. He is being replaced by president and chief operating officer Joseph “Jay” Hooley.
In September, State Street, which performs recordkeeping, transaction processing and securities lending for money managers, purchased Mourant International Finance Administration in the U.K.’s Channel Islands.
As part of the acquisition of the Intesa business, State Street will enter into a long-term agreement with Intesa to service all of its investment management affiliates, including Eurizon Capital, Italy’s largest fund manager.
State Street said that it anticipates to record about $120 million in acquisition costs over five years.
