BNY Mellon is to buy German custodian BHF Asset Servicing in a €253 million deal. The purchase will make BNY Mellon the second largest asset servicing provider in Germany, according to the company. State Street remains the largest.

The sale by owners BHF Bank and Sal Oppenheim includes the BHF-owned fund administration affiliate, Frankfurter Service Kapitalanlage Gesellschaft (FSKAG).

The combined organisation will have €473billion in assets under custody and administration and depot banking volume of €120 billion. Its establishment will see BNY Mellon's capabilities expand to German custody services and Kapitalanlage -Gesellschaft (Kag) investment fund administration.

Michelle Grundmann of BNY Mellon and Juergen Frank of BHF Asset Servicing will head the business out of Frankfurt, which will have 340 staff. Both will report to Nadine Chakar, head of Europe, Middle East and Africa at BNY Mellon Asset Servicing. The two companies had an existing partnership which was signed in March 2009.

BNY Mellon expects to close the deal, subject to regulatory approval, by the third quarter of 2010. Recently BNY Mellon acquired PNC Global Servicing for $2.31 billion.