Magazine article American Banker

Banks' Concerns Force NBD to Cancel Service Partnership

Magazine article American Banker

Banks' Concerns Force NBD to Cancel Service Partnership

Article excerpt

NBD Bancorp pulled the plug on a plan to offer investment services to 12 correspondent banks after some of them raised concerns about sharing customer lists with the regional powerhouse.

Officials at Essex Corp., a New York investment marketing firm that was NBD's partner in the aborted plan, said some of the banks got cold feet after NBD purchased a majority share in an insurance company that was to supply many of the investment products.

One bank, in particular, worried that NBD's 80% stake in Charter Oak Insurance Agency, Lathrup, Mich., presented a "conflict of interest," said Susan Blenman, a program director at Essex who works with NBD's brokerage division, Charterpoint Investment Services. She would not identify the bank.

NBD, based. in Detroit, disclosed last month that it was withdrawing from the partnership, but did not discuss the reasons.

The plan had called for NBD and Essex to offer the Charterpoint Investment Services program to other banks that have business relationships with NBD.

In the past two years, several major banks have announced plans to "syndicate" their brokerage services programs. The idea is to squeeze fresh business out of correspondent relationships while creating new sales outlets for proprietary mutual funds. But only a few such programs have taken off.

The partnership between NBD and Essex had the potential of generating a steady flow of new business for both. A spokesman for the Michigan Bankers Association said that with about 120 banks, "NBD is the unquestioned correspondent leader in Michigan. …

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