State Street has agreed to buy investment bank Brown Brothers Harriman & Co's (BBH) investor services business for $3.5 billion in cash, strengthening its hand in the battle to be the world's biggest custodian bank.
Both companies have operations in Ireland.
The companies said today's deal would include BBH's custody, accounting, fund administration, global markets and technology services operations.
It comes less than a year after reports that State Street was looking to offload its other main business, asset manager State Street Global Advisors.
A custodian bank holds customers' securities for safekeeping to prevent them from being stolen or lost.
Adding BBH's $5.4 trillion in assets under custody to State Street's $31.9 trillion portfolio will help the combined company challenge Bank of New York Mellon for supremacy in the US as the market providing custodian and other administrative services to the banking sector.
Founded in 1818 and headquartered in New York City, BBH counts institutions, privately held companies, families and wealthy individuals as its clients.
BBH will continue to operate its separate private banking and investment management businesses after the sale of its investor services unit, the banks said.
The deal, which is expected to close by the end of the year, will also give Boston-based State Street access to BBH's expertise in cross-border, alternatives, exchange-traded funds, and other high-growth asset classes.
State Street's chief executive Ron O'Hanley said it would enhance the bank's position and scale on a range of services and markets and grow relationships with many of the leading global asset managers.
Media reported late last year that the other half of the bank's business, State Street Global Advisors, one of the biggest asset managers in the world, was up for sale.
Executives have been mum on that deal since, which would align with today's move to focus on the custodian business.
Last week State Street announced plans to create 400 new jobs in Kilkenny over the next two years as it sets up a new specialist team to provide technology infrastructure and cyber security services to support group operations globally.
State Street currently employs about 2,000 staff in Ireland across Dublin, Drogheda, Naas and Kilkenny.
BBH also has a presence in Ireland and opened its Dublin office in 1995. It said today that "one of the largest providers in Ireland, working with many of the world's leading asset managers".
"Our Dublin office offers a full suite of asset servicing and data solutions across the middle and back office for managers with Ireland domiciled UCITS and non-UCITS and U.K. funds. We also provide custody, data, and infrastructure services to European private and national banks and are recognized as leaders in ETFs and CCFs," the company added.
