State Street Corp. said that it has agreed to acquire a European fund administrator to expand its alternative servicing capabilities and could indicate another trust bank is ready to move beyond the financial crisis and into consolidation.

The Boston company announced Tuesday that it planned to buy Mourant International Finance Administration, which is based in Jersey in the Channel Islands, in a cash transaction. The deal, which is expected to close in the first quarter, will add $170 billion in assets under administration  to the company and approximately 650 employees in Dublin, Singapore and New York.

Mourant specializes in fund administration (not management) services for alternative investments, such as private equity, real estate and hedge funds. Jack Klinck, an executive vice president and global head of State Street’s alternative investment solutions team, said that the deal will give State Street just under $600 billion and the largest global market share in alternative assets under administration. Currently, State Street trails Citco Fund Services Inc., a unit of Citco Group Ltd., which had $585 billion in alternative assets under administration.

International expansion through acquisition has been part of State Street’s strategy for the past three years under Ronald Logue, its chairman and chief executive officer. Logue, who announced in October that he plans to retire in March, has said that he wants the company to be able to generate 50% of its revenue from international channels. “Over 90% of Mourant’s revenue is non-U.S.,” Klinck said. “I mean, when you think about Ron talking about geographic expansion and acquiring capabilities to integrate into the franchise, this ticks all the boxes.”

Marty Mosby of First Horizon National Corp.’s FTN Equity Capital Markets said the deal is in line with State Street’s strategy to expand its asset base both domestically and globally. “Acquisition and consolidation will be a big part of the growth of financial institutions in the next three to five years, but State Street is a bit ahead of the game because they have been able to get the downturn behind them sooner,” he says. “The timing is right for them because they are already moving into consolidation rather than dealing with financial problems like some of their competitors.”

Analysts say the largest trust banks — Northern Trust, State Street, and Bank of New York Mellon— avoided the worst of the financial crisis by relying on asset servicing and asset management rather than on traditional banking services like lending. They therefore can begin to acquire sooner than other banks.

 
In August, Bank of New York Mellon announced that it had agreed to buy Insight Investment Management Ltd. for $387 million from Lloyds Banking Group PLC. Insight, which is based in London and is the third-largest manager of U.K. pension funds, specializes in so-called liability-driven investment solutions, active fixed-income asset management and alternative asset management. The deal, which is expected to close this month, would add $131.9 billion in assets under management for Bank of New York Mellon.

Analysts said more banking companies and other wealth managers will slowly begin acquiring next year. “Companies have to emerge from the overhang of financial stress before they can begin to consider expansion,” Mosby says. “State Street is already down that path so they can look for positive strategic moves.”

State Street plans to look for more acquisitions, but it wants to close this deal, which it expects to be accretive to earnings, before it makes another, says Klinck. “We don’t want to be too far over our skis. We want to be focused on retaining employees and clients. State Street is a big company with a lot of resources and we can handle multiple acquisitions at one time, so I wouldn’t rule anything out, but for the time being we want to put our attention on this deal.”

State Street has expanded its capabilities in the alternative-asset servicing segment of the global fund administration market over the past seven years. In 2002, the company bought International Fund Services, which provides hedge fund administration services, and in 2007, it bought Investors Financial Services Corp. and Palmeri Fund Administrators.

Klinck said that when the Mourant deal is complete, there will be opportunities to cross-sell State Street’s custody services to Mourant’s customers. “There is not really an overlap in these client bases,” he said. “The overwhelming majority of Mourant’s clients are not State Street clients. So this provides significant opportunities for us.”