Magazine article American Banker

State St. Plans Separate Bank for Europe

Magazine article American Banker

State St. Plans Separate Bank for Europe

Article excerpt

In a move that could set a precedent for other U.S. institutions, State Street Corp. plans to open a separate bank for its European operations.

Executives said the move would allow the bank to operate across borders in the European Community without having to obtain banking licenses from each country in which it pursues business. They added that the arrival of a single currency in Europe has also increased the need for a separate entity in Europe to run local operations.

"This gives us both a legal and strategic platform to provide services on a pan-European basis," said Stanley Shelton, executive vice president for financial markets.

Mr. Shelton added that imminent moves by 11 European countries to move to a single currency Jan. 1, 1999, combined with the pending creation of a European central bank, have added pressure on State Street to realign its activities in Europe.

Introduction of a common currency, the euro, would create a single market for securities in most of Western Europe. It is also expected to improve capital markets liquidity for investors, foster cross-border mergers and acquisitions, and provide expanded business opportunities for banks with Europewide networks.

"The lower interest rate environment created by the euro, coupled with pension reform and the expanded interest in equity investing, will create demand for the products and services in which we specialize, including quantitative investment management, trade execution and daily pricing," said David A. Spina, State Street's president and chief operating officer, in a release.

The new entity, State Street Bank Europe Ltd., has obtained approval of the Bank of England and will be based in London. Company executives said it would house all of State Street's European branches, representative offices, and locally owned banks.

State Street has been rapidly expanding its international operations, including treasury, investment management, brokerage, custody, accounting, and administration. …

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