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State Street

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, already one of the biggest security custodians in the world, expanded the business overseas Tuesday with the $1.5 billion purchase of Deutsche Bank's Global Securities Services unit.

State Street is buying Deutsche Bank's Global Custody segment, a unit with about 2.2 trillion euros of assets; its Global Fund Administration Services; its Agency Securities Lending; the Global Performance Measurement unit and its Benefit Payments businesses. About 3,200 employees will transfer in the transaction.

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State Street will make an initial payment of $1.2 billion and the rest of the price will subsequently be determined by the unit's performance. The deal is expected to dilute State Street's 2003 earnings by 1 cent to 3 cents a share, and add roughly the same amount to 2004 earnings.