Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:State Street Snaps Up a Foreign Fund Administrator Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, December 24, 2009

State Street Snaps Up a Foreign Fund Administrator

Reported by Patricia Kelly

State Street Corporation has been shopping across the pond and agreed to buy a fund administrator on Wednesday, disclosing plans to acquire Italian banking company Intesa Sanpaolo's Securities Services (“ISPSS”) business for an estimated €1.28 billion ($1.87 billion) in cash upon closing.

As part of the deal, which is expected to close in the second quarter 2010, State Street will assume ownership of the company's fund administration operations, as well as the global custody, depository banking, and correspondent banking (banca corrispondente) portions of ISPSS' business. Once integrated, ISPSS would service all of State Street's investment management affiliates, including Eurizon Capital –- the largest fund manager in Italy with roughly €135 billion ($197 billion) in assets under management as of September 30.

“This transaction is consistent with our long-term strategic plan to increase State Street's scale and presence in high-growth markets outside of the United States,” stated Jay Hooley, president and chief operating officer of State Street. “It will also provide State Street with access to a new customer base to which we can cross-sell additional products and services and will give us additional traction in the insurance market. Additionally, it will build on our leadership position in the high-growth areas of fund accounting and offshore fund servicing. Lastly, this acquisition will provide us with a long-term servicing relationship with one of Europe's premier fund managers.”

State Street expects to support the acquired ISPSS balance sheet with roughly €560 million ($800 billion) in capital upon closing.

The move will enable State Street to increase its global footprint, as ISPSS –- deemed “one of Italy's premier banking groups” -- boasts a “significant presence” in the Italian and Luxembourg markets. State Street is also set to gain 555 new employees upon signing, of which an estimated 420 are in Italy and 135 are based in Luxembourg.

“Today's acquisition represents a significant milestone in State Street's strategy to become a truly global provider,” stated Ron Logue, chairman and CEO of State Street. “With the addition of Intesa Sanpaolo's securities services business, we will enhance our ability to provide high-value services to institutional investors around the world and generate long-term value for our shareholders and our employees.”


Company Press Release

*MILAN and BOSTON, December 22, 2009 – *State Street Corporation (NYSE: STT), one of the world's leading providers of financial services to institutional investors, announced today that it has signed an acquisition agreement with Intesa Sanpaolo, one of Italy's premier banking groups, to acquire Intesa Sanpaolo's Securities Services ("ISPSS") business, with operations in Italy and Luxembourg, for approximately €1.28 billion ($1.87 billion) in cash at closing. State Street expects to support the acquired ISPSS balance sheet with approximately €560 million ($800 million) of additional capital at the closing. ISPSS is a leading provider of securities services in the Italian market and has a significant presence in the Luxembourg market. State Street would acquire the global custody, depository banking, correspondent banking (banca corrispondente), and fund administration portions of the ISPSS business. In addition, assuming the cash balances in the business are consistent with levels at June 30, 2009, State Street expects to acquire approximately €11 billion ($16 billion) in cash deposits at closing.

Revenue in 2009 for the ISPSS businesses that would be acquired by State Street is expected to be approximately €293 million ($427 million). The agreement also includes a long-term investment servicing arrangement with ISP to service all of its investment management affiliates, including Eurizon Capital, the largest fund manager in Italy with approximately €135 billion ($197 billion) in assets under management as of September 30, 2009.

"Today's acquisition represents a significant milestone in State Street's strategy to become a truly global provider," said Ronald E. Logue, chairman and CEO of State Street. "With the addition of Intesa Sanpaolo's securities services business, we will enhance our ability to provide high-value services to institutional investors around the world and generate long-term value for our shareholders and our employees."

State Street expects to finance the acquisition through available capital. The closing is anticipated to occur during the second quarter of 2010, subject to regulatory approvals and satisfaction of other closing conditions. State Street expects its capital ratios would remain strong after closing. Based on IBES earnings estimates and assuming there are no material factors impacting capital other than earnings for 2010, following closing of the transaction in the second quarter of 2010, State Street's total capital ratio is estimated to be approximately 16.8%, tier 1 capital ratio is estimated to be approximately 15.6%, tier 1 leverage ratio is expected to be approximately 7.4%, and tangible common equity ratio is estimated to be approximately 5.5%. For more information related to estimated capital ratios, see the "Additional Information Concerning Capital Ratios" section of this press release.

Assuming a second quarter 2010 closing, State Street expects to incur approximately €80 million ($120 million) in pre-tax merger and integration costs over five years, primarily occurring in the first three years, and to achieve approximately €60 million ($90 million) in cost savings over five years, primarily from technology and operations. With a closing during the second quarter of 2010, the acquisition is estimated to be modestly accretive to State Street's operating earnings in fiscal year 2010, excluding merger and integration costs and depending on the closing date of the acquisition.

In the first half of 2009, ISPSS had approximately €343 billion ($500 billion) of average assets under custody, and approximately €141 billion ($200 billion) of average assets under depository bank services. ISPSS' Luxembourg business, which is a leader in offshore fund servicing, accounted for approximately 20% of ISPSS' 2008 revenues.

With this acquisition, based on ISPSS' expected 2009 revenue, State Street continues to progress toward its long-term goal of generating 50% of its revenue from outside the United States. Total State Street revenue derived from non-US operations was 35% for 2008 and, adjusted for the proposed acquisition, would be 38%.

"This transaction is consistent with our long-term strategic plan to increase State Street's scale and presence in high-growth markets outside of the United States," said Jay Hooley, president and chief operating officer of State Street. "It will also provide State Street with access to a new customer base to which we can cross-sell additional products and services and will give us additional traction in the insurance market. Additionally, it will build on our leadership position in the high-growth areas of fund accounting and offshore fund servicing. Lastly, this acquisition will provide us with a long-term servicing relationship with one of Europe's premier fund managers."

Upon closing, State Street would assume approximately 555 new employees, with approximately 420 in Italy and 135 in Luxembourg.

Jim Phalen, executive vice president and head of international operations for State Street's investment servicing and investment research and trading businesses, commented, "With attractive savings rates and a growing pensions market in Italy, we are confident that ISPSS will enhance our ability to deliver investment solutions to this key market. State Street has an excellent track record of acquiring and integrating servicing operations, and has set a goal of retaining 90% of the revenue of the ISPSS business to be acquired by State Street. Following the closing, we look forward to servicing the Italian market and to ensuring a smooth transition for ISPSS' customers and employees."

State Street first established its investment servicing presence in Milan in 2003 with its acquisition of Deutsche Bank's global securities services business.

Hooley concluded, "We feel that our strong capital position allowed us to take advantage of this attractive market opportunity which will further enhance our international presence and add to our financial profile and capital-generation capabilities. As always, we are focused on growth opportunities such as this to build an ever-stronger company and to enhance shareholder value."



 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2021
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use