Magazine article American Banker

Fund Administrators Vie for Megabank Pacts

Magazine article American Banker

Fund Administrators Vie for Megabank Pacts

Article excerpt

Ripples from the bank merger wave are reaching the niche business of providing administrative services to bank-managed mutual funds.

About a dozen administrators-ranging from big bank technology providers such as Bisys Group and First Data Corp. to boutique firms such as Funds Distributor Inc.-serve 111 banks that manage their own mutual funds. These banking companies are mostly large, and they include such active acquirers as NationsBank Corp. and First Union Corp.

Banks turn to these companies to handle unglamorous but essential chores such as fund accounting, record keeping, and daily calculations of the funds' net asset values. Some also double as distributors for bank funds, handling fund organization and marketing tasks that the Glass-Steagall Act puts off-limits to most banks, though banks increasingly have multiple contracts for fund services.

As their client banks merge, fund administrators are building the scale that they need to make their technology-intensive business more economical. But at the same time, mergers mean bank fund families are in flux-and service contracts are sure to be revisited by the funds' boards of directors.

Administrators are already getting into position, though service contracts are typically not reviewed until a merger is complete.

For instance, at least three fund administrators are expected to vie for a relationship with the combined BankAmerica Corp. and NationsBank.

A contract with the new BankAmerica, which would have $57.9 billion of fund assets under management, would be a plum for any of them. The banking companies expect to merge in the fourth quarter.

NationsBank currently splits its business between First Data Corp.'s investment services unit and Stephens Inc.; BankAmerica uses a PNC Bank Corp. subsidiary, PFPC Inc.

PFPC officials declined to comment, but NationsBank's fund administrators accentuated the positive. …

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