Extending its reach further into the European retirement market, State Street Corp. plans to buy the unit trust services business of Bank of Scotland.

Under an agreement announced Wednesday, Boston-based State Street Bank and Trust Co., the principal subsidiary of the $35.5 billion-asset company, will administer $22 billion of assets in 183 unit trust funds.

Terms of the deal were not disclosed. After its closing, which is subject to approval by U.K. regulators and is expected early next year, State Street will open an office in Edinburgh and hire all 45 Bank of Scotland employees working in that division.

State Street operates investment management, pension plan servicing, and a transfer agent joint venture in London. But it has not worked on U.K. unit trusts, which like U.S. mutual funds are sold to retail customers.

"What held us back was, it's difficult in some markets to break in as a brand-new participant," said David Spina, president of State Street Bank. It waited a long time for a U.K. vendor of these services to be sold, he added.

Unit trust trustee work is similar to the mutual fund record keeping and administration the bank does domestically.

Expanding in the United States and abroad, State Street is creating an "infrastructure to underprice and overservice the competition," said an investment banker who asked not to be named.

State Street has $3.8 trillion of assets under custody, and its investment management arm, State Street Global Advisors, has $379 billion of assets under management.

At the same time, State Street Global has announced an agreement for a joint venture with Milan-based Mediolanum to enter Italy's pension plan business as an investment manager and record keeper.

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