QUOTE AND NEWS
Jutia Group  Aug 28  Comment 
[Business Wire] - State Street Corporation announced today that its Chairman, President, and Chief Executive Officer, Joseph L. Hooley will present at the 2014 Barclays Global Financial Services Conference on Tuesday, September 9, 2014 at 9:00...
Jutia Group  Aug 14  Comment 
[Business Wire] - State Street Corporation today announced that its Foundation made 23 grants to support nonprofits in Quincy and Boston during the second quarter of 2014 totaling more than $1 million to support education and career development...
Market Intelligence Center  Aug 4  Comment 
For a hedged play on State Street Corp (STT) MarketIntelligenceCenter.com’s patented trade-picking algorithms selected a Nov. '14 $67.50 covered call for a net debit in the $65.76 area. That is also the break-even stock price for the covered...
The Straits Times  Aug 2  Comment 
August 02, 2014 12:57 AM TEMASEK Holdings' Singapore Technologies Telemedia (STT) has acquired a 40 per cent stake in China's GDS Services, marking its first foray into the booming data centre business there.
Forbes  Aug 1  Comment 
Investors eyeing a purchase of State Street Corp. (NYSE: STT) stock, but cautious about paying the going market price of $69.93/share, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting...
TheStreet.com  Jul 23  Comment 
Story updated at 10 a.m. to reflect market activity. NEW YORK (TheStreet) -- Barclays  lowered its price target for State Street to $79 Wednesday, maintaining its "overweight" rating for the stock. State Street fell -0.1% to $70.05 in morning...
TheStreet.com  Jul 22  Comment 
NEW YORK (TheStreet) -- State Street  shares are down -1.5% to $68.74 in heavy trading volume despite the company beating analysts second quarter earnings estimates by 13 cents per share, reporting earnings of $1.39 per share.Revenues rose 4.7%...
newratings.com  Jul 22  Comment 
WASHINGTON (dpa-AFX) - State Street Corp. (STT) reported that its second-quarter net income to shareholders increased to $602 million from $571 million in the second quarter of 2013. Earnings per share was $1.38, compared to $1.24, a year ago. On...
Wall Street Journal  Jul 22  Comment 
State Street Corp. disappointed investors after the trust bank warned it would be challenging for it to increase revenue faster than expenses this year.
The Hindu Business Line  Jul 11  Comment 
Cannot understand the expectation to lower them further, says Revenue Secretary




 

State Street (NYSE: STT) is a financial holding company, providing a full range of products and services for large pools of investment assets. With $18.79 trillion in assets under custody and $1.91 trillion in Assets Under Management (AUM), their primary clients are institutional investors.[1] STT operates in 25 countries and in more than 100 markets worldwide. State Street manages for some of the world's largest money managers and asset owners with foreign exchange services and transition management services, and quantitative research and technology-driven tools.

State Street's revenue relies on management and performance fees. It announced in June 2008 on their alignment of its global alternative investment servicing capabilities. Their newly formed State Street Alternative Investment Solutions (AIS), which operates under the Investment Servicing business, combines State Street Corporation’s hedge fund, private equity, and alternative risk offerings to provide a complete set of fund accounting, fund administration and risk services to hedge funds and private equity funds.

State Street faced legal troubles in early 2008 when investors sued over losses in fixed-income strategies managed by State Street Global Advisors. The plaintiffs claim that State Street did not properly communicate the investment objectives of the fund. The company set aside $618 million for legal expenses.

Company Overview

State Street Corporation provides a full range of products and services for institutional investors worldwide, through its subsidiaries, including its principal banking subsidiary, State Street Bank and Trust Company. The company was founded in 1832, and has a total of 27,310 full-time employees.[1] Its company headquarter is located in Boston, MA, with office operating in 26 other countries and network spanning more than 100 geographic markets.

Business & Financial Metrics

In 2009, STT posted total revenues of $9.6 billion. This was a decline from its 2008 total revenues of $12.9 billion. This in turn had a huge impact on STT's net income. Between 2008 and 2009, STT went from a net profit of $1.8 billion in 2008 to a net loss of $1.9 billion in 2009.[2]

Business Segments

The company's broad and integrated range of services spans the entire investment spectrum, such as research, investment management, trading services and investment servicing. It has nearly $2 trillion under management, foreign exchange and securities lending, etc. Its subsidiaries include State Street Corporation, State Street Bank and Trust Company. State Street operates in 3 lines of business, which are Investment Management, Investment Servicing, and Investment Research and Trading.

Investment Management

This division, named State Street Global Advisors (SSgA), serves as an investment advisor to investment companies globally. They offer investment strategies for clients of every size and investment objective. It provides integrated solutions and trading services to their clients who want to outsource aspects of their investment programs. [3] Their services include active and passive United States and non-US equity and fixed income investment management strategies as well as securities finance, etc.

Investment Servicing

This division offers custodial and other investment services to insurance companies, foundations, endowments, corporate and public retirement plans, hedge funds, US mutual funds, global collective investment funds, and institutional investors. They provide shareholder services, including mutual fund and collective investment fund shareholder accounting, through its half-owned affiliates, Boston Financial Data Services, Inc. and the International Financial Data Services group. Their products comprise of custody, accounting, daily pricing and administration; master trust and master custody; recordkeeping; foreign exchange, brokerage and other trading services; securities finance; deposit and short-term investment facilities; loans and lease financing; investment manager and hedge fund manager operations outsourcing; and performance, risk and compliance analytics to support institutional investors.

Investment Research and Trading

This division, known as State Street Global Markets, specialize its research and trading in foreign exchange, money market products, equities, derivatives and fixed income.

Trends and Forces

Exposure to Growth of Asset Management Industry

State Street has benefited from the growth in hedge funds, mutual funds, and other entities needing investment servicing. The hedge fund boom has resulted in a jump from $40 billion in hedge fund assets under management in the late 80s to over $650 billion AUM in the 2000's. Below is a breakdown of State Street's assets since 2003. Since STT earns revenues based on a percentage of its total AUM, this increasing trend bodes will for STT's future revenues.

Exposure to International Growth

State Street has benefited from the high growth of international markets. Over 25% of serviced and managed assets at State Street are from overseas. The company operates a global business that can withstand a slow US economy and thrive on international growth. The company has the largest global exposure among its competitors at 41% of total revenues. 32% at Bank of New York; 34% at Northern Trust.

Adverse Market Conditions May Impact Fees but Improve Forex Revenue

State Street relies on management and performance fees for revenue. Adverse market conditions in 2007-08 leads to client assets reduction and thus State Street's revenue. On the asset management side, fund performance is negatively impacted due to weak equities. However, State Street has profited from these conditions in the form of higher foreign exchange revenues and better lending spreads.

Competition

Against most of its competitors, State Street has the advantage of size. Its competition consists of the following:

  • Bank of New York Mellon Corporation (NYSE: BK) is a global financial services company. Its subsidiaries engage in trust and custody activities, investment management services, banking services and various securities-related activities. The Company operates through seven segments: Asset Management; Wealth Management; Asset Servicing; Issuer Services; Clearing and Execution Services; Treasury Services and Other.
  • Citigroup (NYSE: C) is a bank holding and diversified global financial services holding company whose businesses provide a range of financial services to consumer and corporate customers. Citigroup was organized into four major segments: Consumer Banking, Global Cards, Institutional Clients Group and Global Wealth Management.
  • Northern Trust Corporation (NYSE:NTRS) operates as the holding company for The Northern Trust Company that provides a range of banking and financial services to large and mid-sized corporations and financial institutions in the United States and internationally. It generates various deposit products, including demand and other noninterest bearing, savings, money market, savings certificates, and time deposit accounts.

References

  1. 1.0 1.1 STT 10-K 2009 Item 1 Pg. 1
  2. STT 10-K 2009 Item 6 Pg. 31
  3. Reuters. State Street Corp Profile.
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