Ronald E. Logue, Chairman and CEO of State Street, will step down from the helm on March 2010. Jay Hooley, chief operating officer and 23-year State Street veteran has been named as successor.
State Street has a habit of grooming COOs for leadership. Logue succeeded David Spina as Chairman and CEO of State Street in June 2004 after serving for four years as COO.
Logue spent much of his time cementing acquisitions and looking for new targets. Among his claims to the top job was his leadership of the challenging integration of the global custody business of Deutsche Bank, which State Street acquired for $1.1 billion in January 2003. After promotion, State Street acquired Investors Financial Services Corporation, parent company of Investors Bank & Trust, for $4.5 billion, in spring 2007. 2007 also saw the Boston based bank agree to pay $564 million for foreign exchange trading platform Currenex.
Much of Logues drive for empire building came from the fear of industry consolidation. Back in 2007, State Street was a tenth the value of Citi or Bank of America, a seventh that of JPMorgan Chase, and a quarter that of Wells Fargo or Wachovia. In an interview with Global Custodian at the time Logue stated that “Market capitalization is always a concern for us. It is going to have to grow. We need to be a much higher market capitalization company. We need space to maneuver.”
Today, State Street has capitalized on the drive from hedge funds and asset management vehicles to seek a safe custodial environment. During Logues tenure as CEO State Streets operating revenues from 2004 through 2008 have grown by a five-year compound annual growth rate of 18.9%. Reflecting the companys global expansion, during the same period State Streets non-US revenues have grown to 35% of total revenue.
Of the eight banks called to testify before Congress earlier this year, State Street received only $2 billion in government funds, the fewest out of those present in Washington.
Logues only blemish in what many see to be a successful tenure as CEO of State Street is the recent lawsuit by two Californian pension funds (including the giant California Public Employees’ Retirement System), accusing State Street of inflating fees charged for foreign currency trades.
Giles TurnerNews Editor
From the GC Archive: Still in the end-game