State Street Corporation announced today that it has entered into a definitive agreement to sell its Corporate Trust business to U.S. Bank, N.A., the lead bank of U.S. Bancorp.
“Our decision to sell the Corporate Trust business reflects our commitment to continually strengthening our focus on our core businesses,” said David A. Spina, chairman and chief executive officer of State Street Corporation. “This transaction enables us to further match our resources to opportunities where we can best leverage our global presence and competitive advantage.”
State Street’s Corporate Trust business employs about 500 people. U.S. Bank is expected to retain a majority of the employees.
“This acquisition underscores our position as an industry leader in providing world-class Corporate Trust services,” said Jerry A. Grundhofer, president and chief executive officer of U.S. Bancorp. “We are committed to providing our new customers with the same high level of quality services that they are accustomed to, and we are extremely pleased to welcome State Street’s talented Corporate Trust professionals to the U.S. Bancorp team.”
Subject to regulatory approval, the transaction is expected to close by year-end. State Street anticipates that the divestiture will be neutral to earnings per share in 2003. Corporate Trust services contribute approximately 3% of State Street’s total revenue, primarily in servicing fees. Under the terms of the agreement, the transaction is valued at approximately $725 million, about 10% of which will be escrowed pending the successful transition of the business.
State Street’s Corporate Trust business includes serving as trustee and paying agent for the issuance of taxable and non-taxable securities, including the review of documents and indentures, registration and authentication of bonds, receipt and disbursement of bond sale proceeds, successor trusteeships, escrow account services and transfer and paying agency services. It also includes bond administration, escrow services, investment banking, loan portfolio services, mortgage and asset-backed securities, and structured finance trust services.
Minneapolis-based U.S. Bancorp, with assets in excess of $173 billion, is the 8th largest financial services holding company in the United States.