Dreyfus chief sees harmonious union in Mellon merger.

Howard Stein, the chairman of Dreyfus Corp. has some advice for bankers who are surprised by his habit of working at home on Fridays.

"The bankers should try it for a day and see what happens," Mr. Stein beamed during an interview in his airy midtown-Manhattan office. They might find, as he has, that a day's solitude makes them more productive.

Though his work routine is decidedly unbankerly, Mr. Stein says he isn't fazed by talk that Dreyfus could be in for a culture clash with Mellon Bank Corp., its merger partner.

One-Stop Shopping

The ambitious merger, announced Dec. 6, wowed the financial industry but left a number of people wondering if the two organizations would be compatible.

"We're going to get along just fine," Mr. Stein replies. "We have one purpose, and that is to have all financial services in one system, under one roof, at reasonable prices."

Mr.Stein, 67, chairman and chief executive of Dreyfus since 1970, even has a playful nickname for the merged companies: "It's |Financial Services |R' Us.'"

If Mr. Stein doesn't fit the mold of a banker, he isn't exactly your typical mutual fund executive, either.

Musical Background

A classically trained violinist, Mr. Stein studied at the Julliard School before quitting music for a job in the brokerage business.

The vocabulary of music occasionally invades his speech, as when he says of President Clinton's economic policies: "He's beginning to get the rhythm now, beginning to get in step."

Mr. Stein's 55th-floor office and an adjoining conference room are furnished in elegant but spare modern style, in apparent deference to the breath-taking views of Manhattan. "The art's out there," he said.

During an hourlong interview, Mr. Stein curled up in an upholstered swivel chair to talk about his aspirations for the new financial powerhouse that he is helping to create.

Upon consummation of the deal in mid-1994, Mellon Bank Corp. would become the biggest bank player in the mutual fund industry, with $80 billion in fund assets under management. Dreyfus will continue to operate as a stand-alone company, albeit as a subsidiary of Mellon.

There's considerably more to the deal than just mutual funds, Mr. Stein maintains.

He sees a big opportunity for Mellon and Dreyfus to crossmarket an array of products, thereby becoming the central provider of financial services to their clients.

Over the past year, Dreyfus has pumped $40 million into a computer system to link its mutual fund customers to an array of other financial services. For example, a small bank owned by Dreyfus would make mortgages and issue credit cards.

Missing Pieces

But Dreyfus found its own ability to provide these services was somewhat limited. Dreyfus was mulling how to proceed when, about five months ago, "they walked in the door." The Mellon Bank executives "had all of those things we needed." They hashed out initial plans for a merger over dinner.

Mr. Stein has known Mellon chairman Frank Cahouet for many years, since Mr. Cahouet's days at Security Pacific.

Lately, he has been observing the details of Mr. Cahouet's life with interest. "He gets up at 5:30 in the morning and gets to work at 6," he reported.

But Mr. Stein says he's not intimidated; he's on the job round the clock. "Either I'm woken up at 4:30 in the morning, or we tend to talk through the evening and through the night."

Mr. Stein says his new partners at Mellon are shattering the image of risk-averse bankers. "They are imaginative - they see opportunity and they are moving with it."

He added, "Frank Cahouet is taking a risk and diluting his earnings to help construct this new financial service business. It's a pioneering move."

Since the merger was announced, Mr. Stein has been in close contact with his new colleagues. Last Monday, Mr. Cahouet came by Dreyfus Corp.'s midtown offices for lunch. Later in the week, Mellon vice chairman W. Keith Smith came by for a meeting with Mr. Stein

As 1994 begins, Mellon and Dreyfus will establish a number of committees "to work together in the development of the business," Mr. Stein said.

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