State Street to buy Bank of Ireland unit

By Svea Herbst-Bayliss and Matthew Scuffham

BOSTON/DUBLIN (BestGrowthStock) – State Street Corp (STT.N: ), one of the world’s largest money managers for institutions, is buying Bank of Ireland’s (BKIR.I: ) asset management business to help the U.S. company expand its footprint abroad.

State Street said on Friday that it would pay 57 million euros ($79 million) in cash for Bank of Ireland Asset Management (BIAM). The deal, which must be approved by the European Commission, is expected to close in the first quarter of 2011 and will help boost next year’s earnings slightly, State Street said.

For Boston-based State Street this is the latest in a series of acquisitions designed to help the 218-year-old company to achieve its goal of earning half of its income abroad. Currently State Street earns roughly 38 percent of its revenue outside of the United States.

Bank of Ireland, the country’s biggest bank by market value, agreed in April to an EU demand to sell BIAM and a building society in return for the EU allowing a capital injection from the government in 2009.


Earlier this week, State Street Chief Executive Joseph Hooley told investment analysts that the company was always keeping its eyes open for new targets, particularly in Europe and Asia.

In the last year, State Street has twice made acquisitions in Europe. It bought the securities services business of Intesa Sanpaolo (ISP.MI: ), Italy’s biggest retail bank, and acquired Channel Islands-based Mourant International Finance Administration to service alternative assets. Both acquisitions helped State Street bulk up as a record keeper.

This acquisition will help beef up State Street’s money management arm, State Street Global Advisors, with the roughly 26 billion euros BIAM has in assets under management. State Street also said that 120 employees from BIAM are expected to join State Street in Dublin.

The Bank of Ireland, which is 36 percent-owned by the Irish government, said that BIAM would continue to be a provider of investment products to it.

On Tuesday, State Street reported a higher-than-expected third-quarter profit (Read more your timing to make a profit.) as assets under management rose to $1.9 trillion and assets under custody and administration climbed to $20.2 trillion.

“This acquisition enables SSgA to expand its range of investment capabilities to include active fundamental management,” Scott Powers, SSgA’s president and chief executive, said in a statement.

Since the financial crisis hit in 2008, nervous clients have put more money into passively managed portfolios of U.S.-based money managers, something that has helped State Street.

The company has also said that it expects that tide to turn at some point when confidence returns to the markets and investors become bolder again.

(Editing by Steve Orlofsky)

State Street to buy Bank of Ireland unit