State Street, the US’s third-largest custody bank, sold $11 billion in mortgage- backed securities and other assets, a step more financial companies may take after global regulators agreed to tighten capital rules.

The sale will reduce earnings by $350 million in the current quarter, the Boston-based company said in a statement yesterday.

State Street fell $1.55, or 3.4 per cent, to $44.62 in NYSE composite trading.

The G20 last month endorsed rules, known as Basel III, increasing the level of the highest-quality capital that banks must hold to cushion against losses and avoid a repeat of the financial crisis. After the transaction, State Street’s Tier 1 common capital ratio, the most important regulatory measure of a bank’s financial health, will rise to 8.8 per cent under the new rules, the bank said. – (Bloomberg)