State Street completes Deutsche Bank acquisition
03-02-2003
Caroline Cakebread

State Street's initial payment to Deutsche Bank for all of the business units is US$1.1 billion. State Street will make additional payments of 360 million euros based on the performance of the acquired businesses during the period ending Jan. 31, 2004.

Through the deal, State Street has acquired businesses serving investment managers, private and public pension funds and insurance companies in 92 markets. The acquisition means that 3,200 Deutsche Bank employees are now State Street staff members.

Strategic benefits such as a broadened global client base, economies of scale and a major foothold in European markets are what State Street aims to gain through the acquisition. The deal gives the company Deutsche Bank's global custody businesses, with assets under custody estimated at US$2.2 trillion. State Street also acquires fund administration and Depotbank services, securities lending capabilities, performance measurement services, and benefit payments services, along with U.K. and U.S.-based domestic custody and clearing operations.

As part of the agreement, State Street will also provide global investment services to Deutsche Asset Management. Subject to fiduciary approval, the 10-year agreement will see State Street providing the firm with custody, fund administration, accounting and global securities lending.

The acquisition is expected to dilute earnings per share by approximately 17 cents to 22 cents in 2003, primarily due to restructuring costs. Those costs are estimated at US$90 to $100 million. State Street expects to reduce costs in the acquired businesses by US$125 to $130 million in 2003.