State Street Expanding to India with Deal To Offer Mutual Fund

Under a memorandum of understanding with Unit Trust of India, State Street Boston Corp.'s main operating unit will set up a joint company to provide fund accounting services to India's estimated $33 billion mutual fund market.

The bank also plans to open a representative office in India.

State Street will take a 20% stake in the Bombay-based company with an option to increase its holding to 50%. The bank said it expects the company to begin operating by yearend, pending approval from the Indian government and the Reserve Bank of India.

According to Marshall N. Carter, State Street's chairman and chief executive, the Indian mutual fund market has some 59 million investor accounts. Total assets are expected to increase to more than $100 billion over the next five years as private-sector sponsors enter the market, he said.

The joint venture "will leverage State Street's expertise in the mutual fund accounting area by capitalizing on our technological infrastructure and extensive mutual fund capabilities," he added.

Jacques-Philippe Marson, State Street's director of international financial asset services, said the Indian venture was part of a plan "to become a global organization.

"India came on the radar screen because a lot of things there are coming on stream as the economy moves from government ownership to privatization," Mr. Marson said.

State Street will start with fund accounting but hopes to extend its operations to securities transfers, shareholder record keeping, and custody for mutual funds, banks, and other financial institutions.

State Street estimated that Unit Trust, a government-owned company, handles 75% of India's mutual funds, with $25 billion in assets in 58 different funds.

State Street, one of the largest securities custodians and asset managers in the United States, is upgrading its international operations to keep pace with rapidly growing securities markets around the world.

The bank is currently seeking to upgrade its representative office in Taiwan to a branch and has also obtained a banking charter in Germany.

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