Northern Trust shares pop as takeover rumors swirl

By Reuters
Posted Oct. 26, 2010 at 10:46 a.m.

Shares of Northern Trust Corp. jumped 4.4 percent on Tuesday as talk swirled that HSBC, Europe’s biggest bank, may be planning to make a bid for the U.S. trust bank and investment manager.

While talk of a possible bid has been heard around trading rooms for months, analysts said it picked up steam this week after the British newspaper Daily Mail ran a story under the headline “HSBC banks on a Northern tie-up.”

The newspaper wrote of rumors that HSBC is lining up a $65-per-share offer for the company. It cited no sources.

Northern Trust shares were up $2.13 to $50.15 in morning Nasdaq trade. Other asset managers and trust banks were posting tiny gains or small losses.

Northern Trust spokesman Doug Holt said the company does not comment on rumors or speculation.

Only a week ago, Northern Trust reported a 17 percent drop in third-quarter earnings, lagging behind its far bigger U.S. rivals State Street Corp and Bank of New York Mellon.

Northern Trust, like its rivals, has felt the weight of low interest rates, which have hurt the bank’s normally lucrative securities lending business.

While Northern Trust’s assets under custody increased 10 percent to $3.9 trillion in the third quarter and assets under management rose 8 percent to $657.2 billion, the bank remains smaller than its U.S. rivals, suggesting to some analysts that a takeover might make sense.

At the same time, some of Northern Trust’s top executives have said in the past that they are keeping their eyes open to possibly make an acquisition. Traditionally, the company has relied on organic growth.

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