Related to:
Decision

Decision Decision of September 23, 2016

Date: 09/23/2016
Organization: Division of Banks
  • Petitioner: State Street Bank and Trust Company
  • Respondent: Division of Banks

Decision relative to the establishment of State Street Global Advisors Trust Company, a limited purpose trust company

State Street Bank and Trust Company, Boston, Massachusetts (Bank or the Applicant) has applied to the Division of Banks (Division) for a certificate to establish a limited purpose trust company, State Street Global Advisors Trust Company (SSGA Trust), pursuant to the provisions of Massachusetts General Laws chapter 172, section 9A (the Application).  The Bank will establish SSGA Trust as a direct wholly-owned subsidiary pursuant to Massachusetts General Laws chapter 167F, section 2, paragraph 7. 

Notice of the Bank’s Application was posted and published as directed by the Division, thereby affording opportunity for interested parties to submit comments.  The period for filing comments has expired and no comments were received. The Division reviewed the Application and supplementary materials in accordance with the statutory criteria of whether competition among banking institutions will be unreasonably affected and whether public convenience and advantage would be promoted by approval of the proposed transaction.   All documents and materials related to this transaction have been received and reviewed by the Division. 

The Bank is a Massachusetts state-chartered trust company and is a wholly-owned subsidiary of State Street Corporation, a Massachusetts bank holding company.  As of June 30, 2016, the Bank had total consolidated assets of approximately $251.3 billion and total deposits of approximately $199.9 billion.  Currently, State Street Global Advisors (SSGA) is operated as the asset management division within the Bank.  SSGA plans to transfer its business activities to the proposed de novo limited purpose trust company, SSGA Trust subject to any necessary client consents.  These activities include, but are not limited to, maintaining collective investment funds and common trust funds, managing accounts for institutional clients, charitable asset management services and related trust and fiduciary services. The primary purpose of the establishment of SSGA Trust is to facilitate the separation of the Bank’s asset management business.  The Bank and its other affiliates would continue to provide key services to support the business operations of SSGA Trust.  

Pursuant to Massachusetts General Laws chapter 172, section 9A, the Commissioner may grant a certificate to establish a limited purpose trust company if satisfied that public convenience and advantage will be promoted and that competition among banking institutions will not be unreasonably affected.  Materials have been submitted to address the issue of competition among banks in Massachusetts.  Competition will not be unreasonably affected by the proposed transaction because the intended activities of SSGA Trust are already being conducted by SSGA within the Bank itself; therefore, any impact on competition as a result of this transaction will be de minimis.  As a limited purpose trust company, SSGA Trust would not have the authority to accept deposits and an analysis of deposit data was therefore not required to be undertaken in considering this Application.  

The Division has also considered the record of this Application to determine whether public convenience and advantage will be promoted.  The Applicant has provided information about the current business of SSGA and the business to be conducted by SSGA Trust.  The Applicant indicates that the establishment of SSGA Trust provides a vehicle for investment management services that will generate benefits for current customers as well as new clients.  After a review of the factors related to competition among banking institutions as well as public convenience and advantage, the Division has determined that they are consistent with approval of the Application.

SSGA Trust’s proposed President, Chief Investment Officer, Treasurer, Chief Compliance Officer, Chief Legal Officer, Chief Risk Officer, Anti-Money Laundering Officer and Secretary have been identified to the Division.  These senior officer positions identified will be held by individuals who currently hold senior positions at the Bank.  As part of the process to establish a new limited purpose trust company, the Division reviews the general character and the qualifications of the proposed management since proper management is vital to the organization and initial operation of a new limited purpose trust company.  The information on the proposed management structure of SSGA Trust submitted by the Applicant is sufficient for the Division to make a determination on this Application.       

Another statutory criteria to be considered by the Division is that SSGA Trust will have sufficient capital to support its business operations.  The Applicant has indicated that it will contribute initial capital of not less than $10 million to capitalize SSGA Trust.  The capital adequacy will continue to be the subject of extensive review during the regulatory examination process by the Division if SSGA Trust completes its organization.  In addition to this capital contribution, a securities pledge agreement in the amount of $10 million will be executed for the purpose of covering costs in the event of the conservatorship, receivership, or liquidation of SSGA Trust.  The requirements to maintain and fully fund the securities pledge in accordance with the terms of the securities pledge agreement are perpetual unless modified, rescinded, or released, in whole or in part, by the Commissioner of Banks at his discretion.  Growth projections indicate that the proposed limited purposed trust company would meet all regulatory capital requirements from its initial capital contribution. 

Upon review of the complete record of the Application with reference to the relevant statutory and regulatory requirements, the Division has concluded that all such requirements have been met.  On the basis of these considerations, the Application is approved and a certificate to transact business of a limited purpose trust company to State Street Global Advisors Trust Company is hereby granted, pursuant to section 9A of chapter 172 of the Massachusetts General Laws. 

The approval granted herein is subject to the following conditions:

  1. That SSGA Trust submit to the Division documented evidence that it has completed the initial funding requirement of the securities pledge agreement;
  2. That SSGA Trust submit Articles of Organization for my endorsement thereon prior to filing said articles, or other applicable form deemed satisfactory to the Office of the Secretary of State;
  3. That the limited purpose trust company not accept deposits, make loans or otherwise carry on a banking business in the Commonwealth;
  4. That, as a limited purpose trust company, SSGA Trust shall be subject to Massachusetts General Laws chapter 172, sections 10 to 13, inclusive, and other applicable sections of 172; section 36A of chapter 167; sections 13 and 14 of chapter 167I; and sections 2 to 6, inclusive, sections 8 to 11, inclusive and sections 14 to 20, inclusive of chapter 167J, or as amended;
  5. That the proposed limited purpose trust company shall not become effective until Articles of Organization are filed with the Secretary of State; and
  6. That the proposed limited purpose trust company shall be established within one year of the date of this Decision.

September 23, 2016
_____________
Date


David J. Cotney
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Commissioner of Banks

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