Press Releases
State Street To Acquire Intesa Sanpaolo's Securities Services Business in Italy and Luxembourg


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."

State Street will webcast an investor conference call today, Tuesday, December 22, 2009, at 9:30 a.m. edt, available at The conference call will also be available via telephone, at +1 706/679-5594 or +1 888/391-4233 (Conference ID # 48341305). Recorded replays of the conference call will be available on the web site, and by telephone at +1 706/645-9291 or +1 800/642-1687 (Conference ID # 48341305), beginning approximately two hours after the call's completion. The telephone replay will be available for two weeks following the conference call. This press release and presentation materials referred to on the conference call are available on State Street's website, at under "Investor Information--Latest News, Annual Reports and Financial Trends—Financial Trends," and "Investor Events and Presentations."

About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $17.9 trillion in assets under custody and administration and $1.7 trillion in assets under management at September 30, 2009, State Street operates in 27 countries and more than 100 geographic markets worldwide. For more information, visit State Street's web site at

About Intesa Sanpaolo and ISPSS
The Intesa Sanpaolo Group ( is the leading banking group in Italy with about 11.1 million customers and 6,100 branches and one of the top banking groups in Europe. The Group also has commercial banking operations in 13 countries in Central-Eastern European markets and the Mediterranean basin, where it currently serves 8.5 million customers through about 1,900 branches. In addition, the Group is present in 34 countries through a specialist network made up of branches, representative offices and subsidiary banks focused on corporate banking to facilitate the cross-border activities of its customers. The Group's activities are organised in six business units: domestic commercial banking, corporate and investment banking, international commercial banking, public finance, asset management, and financial advisory.

Additional Information Concerning Capital Ratios
Estimates of the following capital ratios are presented in this press release.

The total capital, tier 1 capital and tier 1 leverage ratios are calculated in accordance with applicable bank regulatory requirements.

The ratio of tangible common equity, or TCE, ratio, is calculated by dividing total common shareholders' equity by consolidated total assets, after reducing both amounts by goodwill and other intangible assets net of related deferred taxes. Total assets reflected in the TCE ratio also exclude cash balances on deposit at the Federal Reserve Bank and other central banks in excess of required reserves. The TCE ratio is not required by GAAP or by bank regulations, but is a metric used by management to evaluate the adequacy of State Street's capital levels. Since there is no authoritative requirement to calculate the TCE ratio, our TCE ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry.

The estimates of the ratios presented in this release reflect the estimated effects of the closing of the transaction and assumptions relating to, among other things, the size of cash deposits acquired, amounts of incremental capital required to support the balance sheet, the return on the acquired cash deposits, and the continued financial positions of State Street and ISPSS. Financial information concerning ISPSS and related estimates are based upon representations made in the acquisition agreement.

Forward-Looking Statements

This press release contains forward-looking statements as defined by United States securities laws, including statements about our agreement to acquire the securities services business of ISPSS, the results and impact of that acquisition, including the estimated impact of the acquisition on specified capital ratios and our financial results, and related rationales, as well as about our overall goals and expectations regarding our business, financial condition, results of operations and strategies, the financial and market outlook, governmental and regulatory initiatives and developments, and the business environment. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict, as well as representations in the acquisition agreement, and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any date subsequent to the date of this press release.

Important factors that may affect future results and outcomes include, but are not limited to:

  • the ability to obtain regulatory approvals for the transaction in multiple jurisdictions and the satisfaction of other closing conditions;
  • the risks that businesses will not be integrated successfully, or will take longer than anticipated, that expected synergies will not be achieved or unexpected disynergies will be experienced, that customer and deposit retention goals will not be met, and that disruptions from the transaction will harm relationships with customers, employees and regulators;
  • financial market disruptions and the economic recession, whether in the U.S. or internationally, and monetary and other governmental actions designed to address such disruptions and recession, including actions taken in the U.S. and internationally to address the financial and economic disruptions that began in 2007;
  • increases in the potential volatility of, or declines in the levels of, our net interest revenue, changes in the composition of the assets on our consolidated balance sheet and the possibility that we may be required to change the manner in which we fund those assets;
  • the financial strength and continuing viability of the counterparties with which we or our customers do business and to which we have investment, credit or financial exposure;
  • the liquidity of the U.S. and international securities markets, particularly the markets for fixed-income securities, and the liquidity requirements of our customers;
  • the credit quality, credit agency ratings, and fair values of the securities in our investment securities portfolio, a deterioration or downgrade of which could lead to other-than-temporary impairment of the respective securities and the income statement recognition of an impairment loss;
  • the maintenance of credit agency ratings for our debt and depository obligations as well as the level of credibility of credit agency ratings;
  • the possibility of our customers incurring substantial losses in investment pools where we act as agent, and the possibility of further general reductions in the valuation of assets;
  • our ability to attract deposits and other low-cost, short-term funding;
  • potential changes to the competitive environment, including changes due to the effects of consolidation, extensive and changing government regulation and perceptions of State Street as a suitable service provider or counterparty;
  • the level and volatility of interest rates and the performance and volatility of securities, credit, currency and other markets in the U.S. and internationally;
  • our ability to measure the fair value of the investment securities on our consolidated balance sheet;
  • the results of litigation, government investigations and similar disputes and, in particular, the effect of current or potential proceedings concerning State Street Global Advisors', or SSgA's, active fixed-income strategies and other investment products;
  • the enactment of legislation and changes in regulation and enforcement that impact us and our customers;
  • adverse publicity or other reputational harm;
  • our ability to pursue acquisitions, strategic alliances and divestures, finance future business acquisitions and obtain regulatory approvals and consents for acquisitions;
  • the performance and demand for the products and services we offer, including the level and timing of withdrawals from our collective investment products;
  • our ability to grow revenue, attract and/or retain highly skilled people, control expenses and attract the capital necessary to achieve our business goals and comply with regulatory requirements;
  • our ability to control operating risks, information technology systems risks and outsourcing risks, the possibility of errors in the quantitative models we use to manage our business and the possibility that our controls will fail or be circumvented;
  • the potential for new products and services to impose additional costs on us and expose us to increased operational risk, and our ability to protect our intellectual property rights;
  • changes in government regulation or new legislation, which may increase our costs, expose us to risk related to compliance or impact our customers;
  • changes in accounting standards and practices; and
  • changes in tax legislation and in the interpretation of existing tax laws by U.S. and non-U.S. tax authorities that impact the amount of taxes due.

Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2008 Annual Report on Form 10-K, our Current Report on Form 8-K dated May 18, 2009, and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on Risk Factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, December 22, 2009, and we do not undertake efforts to revise those forward-looking statements to reflect events after this date.

Back to Press Releases