State Street one deal away from topping BNY Mellon

State Street is potentially just one mega deal away from becoming the largest custodian by assets.

By Joe Parsons

State Street is just one large mandate away from overtaking BNY Mellon as the world’s top global custodian, after surpassing $31 trillion in assets under custody/administration (AuC/A) in the second quarter.

For the Boston-based custodian, AuC/A increased 12% in the quarter year-on-year, “fuelled by a combination of new business activity and higher equity markets,” according to Joseph Hooley, State Street’s chairman and CEO.

It’s custody rival – BNY Mellon – reported AuC/A of $31.1 trillion last week, leaving State Street potentially just one mega deal away, such as the mandate it signed with Allianz Global Investors earlier this year to service more than €450 billion in assets, from becoming the largest custodian by assets.

Total assets under custody for State Street reached $23.3 trillion, of which exchange traded fund (ETF) assets held at the custodian increased almost 23% on the year to $7.1 trillion. 

In its quarterly release, State Street recorded new asset servicing mandates of $135 billion, and anticipates a further $370 billion of new assets remaining to be installed for the year.

Asset servicing fees reached $1.3 billion, a 3.3% increase, off the back of new mandate wins. In addition securities finance revenue was up 34.6% to $179 million due to seasonality and growth in enhanced custody.

The results also come despite anticipation from some market commentators that State Street would be surpassed by JP Morgan as the second largest global custodian, following BlackRock’s decision to move $1.3 trillion of assets to the New York-based bank. 

JP Morgan saw its assets under custody increase 8% over the year to $22.1 trillion.