Magazine article American Banker

Investors Financial Services A Processing Standout

Magazine article American Banker

Investors Financial Services A Processing Standout

Article excerpt

Companies that specialize in the arguably dull business of securities processing took a beating this earlier year from some analysts, who downgraded the group saying earnings would be off and the high-flying stocks had reached their peak.

But the processing companies have, for the most part, proven the naysayers wrong. A standout example: Boston-based Investors Financial Services Corp., whose earnings jumped 33% in the first quarter.

Investors Financial has been making a bit of a splash lately. In March it closed a deal with J.P. Morgan Chase & Co. to take over the adviser custody unit of the former Chase Manhattan Bank, a move that brought it $27 billion in client assets. Last week it announced plans to assume the asset administration unit of Barclays Global Investors NA, a subsidiary of the British Barclays Bank PLC; the deal would add $473 billion to assets under management.

Steven Wharton, an analyst at Loomis Sayles & Co., a fund management firm in Boston, said the Barclays deal would help Investors Financial in the long run even though the business being taken over is mostly a low-margin affair.

Nevertheless, the deal could eventually bring the company higher-margin business, Mr. Wharton said. Investors Financial has experience in that: It struck a partnership in 1997 with Goldman, Sachs & Co., taking over a $272 million limited partnership portfolio that it has since transformed into an $11 billion portfolio.

"Obviously this is a great deal," said Mr. …

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