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State Street shares drop after BlackRock agrees to remove $1 trillion in assets from bank's custody

State Street Financial Center building, which houses the company's headquarters, in Boston, Massachusetts.
Brent Lewin | Bloomberg | Getty Images
State Street Financial Center building, which houses the company's headquarters, in Boston, Massachusetts.

Shares of State Street fell more than 4 percent following reports that asset manager BlackRock was taking $1 trillion out of the bank's custody and putting it in the care of JPMorgan.

BlackRock confirmed the news early Wednesday. Shares of JPMorgan rose 1 percent as the broader market rallied and the Dow Jones industrial average topped the 20,000 milestone for the first time.

A State Street spokeswoman told CNBC that the firm will still retain custody over some of BlackRock's assets.

"We remain a significant service provider for BlackRock, and the transition will not be fully completed until 2018," she said. "As I'm sure you've seen from our earnings announcement, we continue to see strong client demand for our services with new asset servicing wins of approximately $1.4 trillion for 2016."

Five-day performance of State Street

On Wednesday, State Street reported fourth-quarter earnings that beat analysts' expectations, although its revenue missed. Its sales of $2.53 billion marked a 0.31 percent decline from the year-ago period.

As of yesterday's close, State Street shares are down 1.6 percent for January.