WSJ: Schwab Purchasing State Street Private-Asset Book

June 24, 2003 (PLANSPONSOR.com) - Charles Schwab Corp. is expected to announce as early as this week that it is buying the private-asset management unit of State Street Corp.

The final price tag on the expected move could be as much as $300 million and would shift the private-asset business that has $13 billion in assets over to Schwab, the Wall Street Journal reported, citing people close to the situation.  

If this is the case, it will represent another move that Schwab – generally regarded as the champion of small investors – is making into the wealthier clientele of the private-asset space.   In 2000, Schwab purchased US Trust in a stock swap valued at $2.9 billion. While this deal pales in comparison, the State Street purchase will add to its heft in this area.

For Boston-based State Street, the move is seen as a way to focus on its core business, investment-services and money management for big institutional investors. Earlier this year, State Street announced the $1.5-billion purchase of the Deutsche Bank Global Securities Services division (See  State Street Outlines Deutsche Operation Integration Plans ).

However, times have been tough for State Street, which in April announced the elimination of as many as 1,800 jobs, or about 8% of its work force, as part of a broad effort to cut $125 million in costs during the rest of 2003.  

Representatives of both firms declined to comment, according to the Journal.

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