State Street and UBS Group are in talks about the possible merger of their asset-management businesses, according to reports.
State Street has hired Goldman Sachs to review the options for its investing business, State Street Global Advisors, as the Boston-based firm believes it needs to boost the size of its asset management operations in order to be competitive, The Wall Street Journal has reported.
The talks started this year, and the two parties were near an agreement this summer, sources told the WSJ, despite the lack of deal involving State Street Global Advisors, the firms "remained in touch."
State Street also has reportedly considered merging its asset-management unit with Invesco, Bloomberg News reported.
The asset manager is looking at the option of striking a joint venture as buying a rival would be challenging under US rules. State Street and UBS had already discussed a similar arrangement in 2012.
State Street Global Advisors, which has more than $3trn in assets under management, is up against larger industry players like BlackRock with $7.8tn, Vanguard with $6.3tn, Charles Schwab with $5.9tn and Fidelity with $3.5tn.
State Street runs dozens of mutual funds and was a pioneer in index investing. Its SPDR S&P 500 ETF trust became the first US exchange-traded fund in 1993 and is now the world's largest ETF with about $320bn in assets.
This article was first published by our sister title Investment Week