Magazine article American Banker

A Big Business by Almost Any Measure

Magazine article American Banker

A Big Business by Almost Any Measure

Article excerpt

One of the great sea-changes in bank regulation over the past decade has been the piecemeal transformation of the Glass-Steagall Act's "walls" between banking and securities into something more akin to mosquito netting.

Step by step, regulators and the courts have allowed banking companies to become full service brokers, discount brokers, purveyors of insurance and marketers of their own mutual funds.

Yet while a great hullabaloo has been raised over many of these developments, relatively little energy has been put into measuring their effect.

More fundamentally, to what extent are bankers taking advantage of their newfound freedoms?

The answer, apparently, is a great deal, judging by a massive study undertaken by American Brokerage Consultants Inc., of St. Petersburg, Fla., in cooperation with the American Banker.

This special section is based on preliminary findings from the study. The data stemmed from, questionnaires sent out in March to all 8,769 banks, thrifts and credit unions in the country with more than $50 million of assets. Nearly nine out of 10 responded.

The project, which was funded in part by Bisys Corp. and Fidelity Investments, sought more detailed information about bank investment sales than had ever before been gathered.

The overarching conclusion: banks are into investment products big-time.

For example, 71% of the surveyed institutions with more than $1 billion of assets said they are selling mutual funds, annuities or other retail investments.

Fifty-eight percent of those institutions with $250 million to one billion of assets are also in this business, along with 42% of the smaller institutions.

Prospects for more banks getting into the business are strong. Two-thirds of the banks that don't now sell investment products plan to do so eventually, with many launches foreseen by the end of next year. …

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