J.P. Morgan Expects Basel III To Hurt State Street

J.P. Morgan expects State Street STT to take a hit from Basel III. In a note to clients, J.P. Morgan writes, "STT expects Basel III to hurt Tier 1 common ratio by over 700 bp, far larger than expected by the market after the benefit of selling $11 bil of low rated securities at a loss. If STT did not sell the securities, we estimate its Tier 1 common ratio at 9/30 would have likely declined to roughly 5-5.5% from 13.9% under Basel I (about 850-900 bp drop)." J.P. Morgan maintains its Neutral rating on STT. STT closed yesterday at $45.74