One of the largest M&A deals in the asset servicing world has been scrapped due to ongoing regulatory delays and current market conditions.

State Street had agreed a $3.5 billion deal to acquire the investor services division of Brown Brothers Harriman (BBH) back in September 2021.

The transaction was set to propel State Street to the world number one asset servicer status in terms of assets under custody. It would also have increased State Street’s presence in non-US markets such as Luxembourg, Ireland and Japan.

However, regulatory “feedback” has caused delays to a deal that was originally intended to close before the end of 2021.

In announcing the termination, State Street stated that the modified transaction structure mandated by regulators was “increasingly complex, presented additional operational risk to State Street and would limit the anticipated transaction benefits relative to original expectation”.

State Street chairman and chief executive Ron O’Hanley added that the decision to scrap the acquisition was “not taken lightly” and is “in no way a reflection of the quality of the BBH franchise”.

In its own statement, BBH expressed disappointment at State Street’s inability to secure regulatory approval. But BBH managing partner Bill Tyree added that the firm has no other plans to sell the investor services business to any other player.

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