State Street said it incorrectly invoiced at least $200 million in asset servicing expenses to clients over a period of 18 years.
The Boston-based custody bank said in a statement Thursday that it "deeply regrets" the matter and will reimburse clients in full, including interest, once it concludes an internal review.
"The actual amount to be reimbursed to clients will not be known until the review is completed, and that amount could differ materially from the company's preliminary assessment," State Street said.
The billing error could worsen already strained relations with customers who were asked to move excess cash deposits from the bank, said Marty Mosby, an analyst with Vining Sparks in Memphis, Tenn. The financial impact should be limited, he said.
"You add something like this and it creates a period where you have to go through and rebuild your reputation with customers," said Mosby. Financially, "it doesn't move the needle."
State Street fell 3.4% at 12:06 p.m., the second- worst performer in the 19-member Standard & Poor's index of asset managers and custody banks. The stock has lost 14% this year.