Profits plunge at Dublin-based State Street unit

Pretax profits at the Irish fund-administration arm of the US financial giant State Street, which reports its performance here in dollars, fell last year by 21.5 per cent to $91.2 million (€66.5 million).

State Street Holdings Ireland (SSHI) also reported a decline in sales in 2012 of 7.6 per cent to $247.8 million.

The division, which employs about half of State Street’s 2,000 staff in Ireland, paid corporation tax of $11.2 million, an effective rate of close to 12.5 per cent. SSHI’s staff numbers fell during the year by 73, to 978 employees.

The fund administration business is now sitting on capital and reserves of $372 million.

Its directors make reference in the accounts to a “departure” from rules governing how goodwill should be amortised in the accounts. Goodwill is usually written off over several years in a company’s accounts. In SSHI’s figures, however, goodwill of $145 million is not written down because “of the strength of the underlying business”.

“The directors are satisfied this departure from the requirements of the companies acts is necessary for the overriding purpose of giving a true and fair view,” the accounts state.

Aside from SSHI, most of the rest of State Street’s Irish business is owned by another entity called International Fund Services (IFS), which comprises State Street’s hedge fund servicing arm.

Its accounts for 2012 also show a slide in financial performance, with sales down last year from $313 million to $299 million. IFS, which emplorys about 900 staff separately to SSHI, recorded a fall in pre-tax profits from $50 million to $32 million. State Street was unavailable for comment yesterday.