Chief executive of the US fund giant State Street aims to raise its foreign earnings, which could be good news for Irish jobs, writes Una McCaffrey.

Ron Logue reckons he brings the sunshine with him to Dublin each time he visits and the 1,100 employees of State Street in the Republic might well agree.

Logue, State Street's chief executive of nearly a year's vintage, has been good for the company's Irish operations. He is the one who led the strategy that saw the company become a funds giant in Dublin's International Financial Services Centre and he believes State Street should create more Irish jobs in the future.

Logue, a native of New England, complete with Boston accent (State Street is the "laahgest" fund administrator in Dublin) is more realistic than idealistic, however.

He acknowledges that the Republic is not the cheapest location for financial services but, equally, he says Boston-based State Street's offering is about value rather than cost.

"If we were just clearing trades, [being in Dublin] would be a bad idea," he says, pointing to the complexity of services State Street provides for offshore and hedge funds from two locations in Dublin and one in Kilkenny.

"The nature of what we're doing here means that it has significant revenue implications, so the equation works," says Logue. Having 200 staff in Kilkenny "helps" with the cost aspect, he adds.

At the moment, State Street has about 6,000 overseas staff out of a total of 20,000. Logue is not the biggest fan of "offshoring" to low-cost locations however, believing instead that service units in his line of work need to be close to their customers. This means "no consolidating thousands of people in places like India" and having operations in cities such as Dublin and London instead.

This is why Logue's drive to internationalise State Street by raising the proportion of revenues it draws from abroad from 37 to 50 per cent spells good news for Irish jobs.

"It would not be unrealistic for us to be going to levels of 1,500 or 2,000 over a five-year horizon," says Logue.

It is all a long way from State Street's first foray into Dublin in the mid-1990s, when it established a small funds servicing alliance with Bank of Ireland.

Massive expansion came in early 2003, when State Street bought the global securities business of Deutsche Bank and inherited the German bank's sizable Dublin funds business.

Before this deal, which was spearheaded by Logue, who then held the role of president and chief operating officer, State Street had 21 staff in Dublin. The transition to more than 1,000 employees makes the Republic the fastest-growing location in State Street's global portfolio.

The Deutsche Bank acquisition was the largest ever completed by the Boston group by a multiple of five. It is no surprise that it secured Logue's eventual arrival in the chief executive's job.

Being in charge of State Street's massive global business - the bank has $9.5 trillion (€7.37 trillion) in assets under custody - seems to sit well with Logue and his love for sunshine.

He admits, however, that his first few months in the job were not completely easy, as they coincided with a sluggish period for the markets. It was a "learning experience", he says.

"The last half year wasn't a good time for anybody. The only difference for State Street was a new CEO. Hopefully, I'm beginning to pay back the shareholders. We're moving in the direction I laid out last November."

Indeed, the bank's most recent quarterly numbers were greeted with considerable enthusiasm. The 6 per cent increase in earnings and 7 per cent rise in revenues to $1.3 billion, while not earth-shattering, put their peers in the shade. Logue believes the market needs to be realistic on future expectations for companies such as State Street.

"This decade is not like the 90s," he says, predicting that the "slow growth economy" will last "multiple years".

"It's not going to come back and look like the 90s, so the goal is revenue growth of between 8 and 12 per cent. But you can still generate earnings per share of between 10 and 15 per cent," he says.

"We need to learn how to operate in a slow-growth environment. This means making sure that revenue grows faster than expenses."

While Logue does his number crunching in State Street, he reckons the decision-makers in locations such as Dublin should continue to work on making their offering attractive in comparison with other offshore centres. Government needs to be "very flexible and quick" in decision-making and there should be an "appropriate balance" between tax and regulation that make it easier to operate here than in other places, he says.

While not intimate with the detail of the recent regulatory brouhaha in the IFSC's reinsurance sector, Logue says that it will always be easy to reach a point where a law of diminishing returns can set in on regulation.

"You can potentially come to a point where over-regulation does harm to a company," he says.

One real consequence of the ever-mounting pile of regulations is the higher cost of compliance, which Logue says needs to be watched. In State Street's case, this compliance bill amounted to $63.7 million last year between lawyers and accountants. This compared to $28.7 million just two years previously, with Logue making no secret of the burden in the bank's most recent results.

"Sooner or later, the cost of all this has to be passed along to the underlying shareholders," he says. The extension of this is that it will eventually also be passed on to staff, or that companies will allocate budgets to compliance instead of expansion.

"It's something that bears watching," is Logue's considered analysis.