Intesa Sanpaolo SpA (ISP.MI), Italy's largest retail bank, has reached a deal to sell its custodian business unit to U.S. financial-services holding company State Street Corp. (STT) in a deal worth up to EUR1.8 billion, people with knowledge of the situation said Wednesday.

"The management board of Intesa Sanpaolo is going to convene in coming days to approve the sale to the U.S. financial company," one person said.

State Street spokeswoman Carolyn Cichon said, "We don't comment on market rumor or speculation."

Rothschild has been advising Intesa Sanpaolo on the deal, while Goldman Sachs (GS) is advising State Street.

The custodian unit is also responsible for holding and safeguarding the securities owned by the bank.

Intesa Sanpaolo's management and supervisory boards met Tuesday in Milan on the matter, also discussing the possible listing of asset-management unit Banca Fideuram.

Intesa Sanpaolo, Italy's largest retail bank with more than 6,000 branches, in September announced a plan to dispose of or list nonstrategic assets in a move to further strengthen its capital ratios.

-By Sabrina Cohen, Dow Jones Newswires; +39 02 5821 9906; sabrina.cohen@dowjones.com

(Marshall Eckblad contributed to this report.)
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