Bank of New York Co. has reduced its controversial stake in State Street Corp. by more than one percentage point, according to documents it filed Tuesday with the Securities and Exchange Commission.
But in an interview, a Bank of New York spokesman described the move as merely a way of taking profits. Bank of New York remains committed to increasing its stake to 9.9% of State Street's stock, the spokesman added.
In its SEC filing, Bank of New York said it had sold 1.6 million shares of State Street in daily blocks from May 27 through June 9, reaping a $72.1 million gain.
Before the selling, Bank of New York had held 5.04% of State Street stock for its own account and for clients. It now holds an aggregate of 6,415,874 shares, or 4% of State Street's total outstanding, and 3.96% for its own account, according to the SEC filing.
"We've always said that the ownership of State Street stock was for investment purposes," said Paul Leyden, spokesman for Bank of New York. "This was an attractive time to take a profit on part of that position."
State Street's stock spiked up 9% last week on speculation that it would soon be acquired. Deutsche Bank and Bank of New York were among the banking companies rumored to be considering a takeover.
The Boston-based bank has been trying to quell those rumors, saying it would fiercely defend its independence.
In January, Bank of New York petitioned the Federal Reserve Board for permission to acquire up to 9.9% of State Street's stock.
At that time, market analysts said Bank of New York could be considering a hostile takeover. Both companies rank among the top three in securities processing, a business that has become an important source of fee income for them.
State Street told Massachusetts regulators this spring that Bank of New York's actions were adversely affecting State Street's ability to win new business.
The Massachusetts Board of Bank Incorporation-which claims jurisdiction over State Street because it is a state-chartered bank-ruled in March that Bank of New York could not increase its stake. It found a lack of evidence that the increase in ownership would be a public benefit.
Bank of New York has sued in U.S. District Court in Boston, seeking to reverse the Massachusetts Board decision. That litigation could take until fall to be resolved, according to analysts.
"We want to have the right to buy up to 9.9% of the stock if we choose," said Mr. Leyden.
State Street would not comment Tuesday.
