Fund administrator State Street is in talks to purchase Bank of Ireland's asset-management business, according to people familiar with the matter.
No agreement has been reached for the unit, which controlled €25 billion of assets as of April 16th, and a sale may take months, they said.
Macquarie Group, the Sydney-based firm that had been negotiating to take over the Dublin-based unit, dropped out, according to two of the people, who asked not to be named because the negotiations are private.
Scott Powers, chief executive officer of the Boston-based company's money-management unit, State Street Global Advisors, said in an interview published August 3rd that the indexing specialist is looking for acquisitions to expand actively managed investments and cut reliance on passive funds. BIAM is primarily an active manager, while State Street is the second- biggest US provider of index funds after BlackRock Inc.
"For a company like State Street that wants to get more integrated in the active asset-management business, a smaller manager could be the foundation for building a much larger product over a five to 10 year period," Gerard Cassidy, an analyst with RBC Capital Markets said.
The European Commission ordered the sale of the unit as a condition of approving a government bailout of Bank of Ireland. BIAM assets have fallen from €57.5 billion in 2004, when it was Ireland's largest investment manager.
Bank of Ireland fell 4.4 per cent to 73 cents at 3.30pm in Dublin trading.
Less than 5 per cent of the $1.78 trillion that State Street Global Advisors handles for clients is held in traditional, actively managed stock and bond investments.
Active investing, which can bring in higher fees, relies on fund managers to select securities based on their own research or mathematical models. Passive investing seeks to track the returns of broad markets or industries by following an index.
State Street declined to comment, as did Bank of Ireland and Macquarie.
Bloomberg