State Street Chairman Jay Hooley has sent a not-so-subtle message to European banks: He's ready to buy their custody and trust operations.

Hooley offered a strong hint of potential European targets last week at the company's annual meeting. One slide ranked leading custody banks around the world, showing that the four largest, all U.S.-based, controlled 60 percent of the global market.

Citing an "opportunity to make acquisitions," Hooley said the next 16 largest custody banks, most of them in Europe, will have a tough time making a go of it.

"We see in competing against these organizations, they don't have the latest product, they're not making investments and sometimes they don't even have the best talent," he said.

Hooley's swipe at European-based custody and trust operations, including market leaders HSBC , BNP Paribas , Societe Generale and Credit Agricole's CACEIS unit, is consistent with what analysts are seeing in the market.

"It feels as if the larger European competitors (HSBC, BNP Paribas and Soc Gen) have been less of a player lately, especially for the increasingly sophisticated clients," Nomura Securities analyst Glenn Schorr wrote in a recent report.

Expanding in Europe is a linchpin to Hooley's global growth strategy for State Street . Over the past decade, Boston-based State Street's revenue outside the United States has nearly quadrupled to $3.9 billion. But that still was just 41 percent of the bank's 2011 operating revenue of $9.5 billion.

The vast assets managed for Europe's aging population of wealthy investors and retirees offers an inviting market for U.S.-based custody banks. State Street says almost 50 percent of worldwide retirement asset growth from 2011 to 2015, excluding the United States, is expected to come from Europe.

A big acquisition in Europe could help State Street pass arch rival BNY Mellon, the global custody bank leader, with $26.6 trillion in assets under custody and administration. JPMorgan Chase is second with $25.2 trillion, followed by $23.2 trillion at State Street.

"I always compare us to how we do against the rest of the world," Hooley said at the company's annual meeting.

BNY Mellon does not have as much capital as State Street and is focused on buying back its own stock rather than making deals. Its stock is off about 27 percent over the past year.

To be sure, Europe's largest banks may not be much interested in selling to Hooley, said Edward Jones analyst Logan Purk. But given new bank capital requirements, Purk would not rule out a deal or two.

"If anyone were to do a game-changing deal, State Street is the only company that can do it," Purk said. "State Street has more dry powder and is hungry for acquisitions."

State Street is likely at least to acquire a service or technological advancement from one of Europe's smaller banks so it can add to its operations immediately, Purk said.

One of State Street's largest shareholders, however, is likely working to curb any appetite for a big deal.

Billionaire activist investor Nelson Peltz's Trian Fund Management LP has said State Street paid too much for previous acquisitions, hurting profits and total shareholder returns. Trian is one of State Street's largest investors and has Hooley's ear.

As a result, Trian's influence is expected to keep State Street's possible bidding more constrained than in years past.

State Street has enough capital to do up to $2 billion in acquisitions, but any deal would require the bank to get the blessing of the Federal Reserve, Nomura's Schorr said.

The question remains whether the Europeans will sell.

HSBC declined to comment on a possible sale. BNP, Societe Generale and Credit Agricole did not respond to requests for comment.

At London-based HSBC, which has announced an unprecedented number of asset disposals over the past 12 months, the custody business generated $395 million in operating income in the first quarter and $1.7 billion in 2011.

Still, HSBC, the largest custody operator based in Europe, has only about $8 trillion in assets under custody and administration, compared with the leaders' more than $20 trillion. Like other global banks, HSBC has to meet the more stringent capital requirements of Basel III. Selling assets and returning to core banking activities are part of the calculus to make regulators happy.

The view inside BNP Paribas is that the bank's custody and trust operations are more valuable than ever because they produce steady profits and are a valuable source of liquidity, according to a high-level executive at the bank who declined to be identified. Those are welcome attributes as European banks race to reduce risk and leverage, the executive said.

Still, State Street's Hooley said he expects to see some opportunities emerge. "We think over time, as we have shown in the past 10 years, there's an opportunity to make acquisitions in this space, if they are smart, well-priced and strategically in the right place," he told the bank's annual meeting.