State Street Corp. has been chosen to provide accounting, custody, and back-office support to the entire product family of the U.K. financial services company Scottish Widows Group.
The Scottish Widows pact was the Boston-based company's second major victory in its drive to go beyond a custodial role and become a third-party administrative service provider. State Street struck its first such deal in May, with Pacific Investment Management Co., an investment adviser in Newport Beach, Calif., with which State Street has had a custodial relationship for many years.
In addition to beefing up State Street's European presence, the company hopes the deal will be a model for relationships in the United Kingdom.
"The Scottish Widows [deal] is a metaphor for the future of asset servicing in the U.K.," said Ronald E. Logue, vice chairman and chief operating officer at State Street.
Geoff Bobroff, a consultant in Providence, R.I., said the era of exponential growth in custodial services may be passing so that State Street's move to integrate various administrative services is an appropriate way to fuel growth.
On a simpler level, the Scottish deal also adds $130 billion to State Street's $6.1 trillion of assets under custody. "It makes us a very large custodial player in the U.K.," Mr. Logue said.
State Street will provide integration assistance to Scottish Widows in addition to clearing trades, calculating fund value, setting up and maintaining information networks, and safeguarding assets for all of Scottish Widows' mutual fund, pension, and life insurance products.
The Edinburgh-based financial services company is meshing administrative functions of four divisions that it consolidated in March. Those divisions are Scottish Widows; Lloyds TSB Life, Pensions, and Investments; Abbey Life; and the former Hill Samuel Asset Management.
