Magazine article American Banker

NationsBank Switch Laid to Growth Needs

Magazine article American Banker

NationsBank Switch Laid to Growth Needs

Article excerpt

It was growth of its mutual funds family, not legal complications, that caused NationsBank Corp. to drop the distributor of its $10 billion Nations Funds.

That, at least, is the word from Funds Distributor, the dropped company. A broke-dealer unit of First Data Corp., it was split off from Boston Co. in May when that company was acquired by Melon Bank. The fund administration part of the business - writing printing prospectuses, administrative services - stayed with Boston Co.

Betsy Connolly, president of Boston-based Funds Distributor, disputed a widely held assumption that legal difficulties related to working with a bank-owned broker-dealer drove NationsBank's decision to switch in September to Stephens Inc. of Little Rock. Ark.

Few people in the business seem to realize that Mellon didn't buy the brokerage.

"What really happened was that Nations wanted to really step up their distribution effort's Ms. Connolly said. "They could do it more effectively with Stephens because they had other business relationships with them."

She added that Funds Distributor's specialty is serving smaller bank clients. "Chances are we're not going to be an active distributor for a lot of huge bank clients." Ms.Connolly said. "In the normal process of bank funds growth, the bank looks to get more control over the marketing itself."

NationsBank's $11 billion family ranked as the third-largest bank fund family at the end of the third quarter, according to data compiled for American Banker by Lipper Analytical Services. …

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