Banks 1-2-3 in Tax-Exempt Management

Some of the nation's biggest banking companies lead the pack of money managers, a recent ranking shows.

State Street Bank and Trust, Bankers Trust Co., and Wells Fargo Nikko, a joint venture between Wells Fargo Co. and Nikko Securities, show up high in the asset rankings compiled by Pension & Investments, a publication that tracks the money management industry.

The rankings reflect Jan. 1 figures.

Wells Fargo Nikko tops the tax-exempt category, which includes pension, savings, and multi-employer group plan funds. With $143,757 billion of such assets, Wells Fargo is followed by State Street Bank and Bankers Trust, in second and third place respectively.

J.P. Morgan and Northern Trust also placed among the top 10 players in this category.

In the category that looks at all assets managed by institutions, and which includes personal trust, global, and retail assets, along with tax- exempt assets, Bankers Trust ranks second, followed by State Street. Fidelity Investments, the mutual fund giant, had the most total assets, with $296,300 billion. Wells Fargo Nikko is in fifth place, and J.P. Morgan in ninth.

But observers said that the absence of more banks in the top ranks is as significant as the presence of a handful of banks in the top 10.

Robert G. Burke, a managing director in the global investment group at Bankers Trust, said that before 1974, when the Employee Retirement Income Security Act was passed, banks and insurance companies managed most of the available assets.

Passage of the law loosening the eligibility and management rules of pension funds has enabled independent money management firms and smaller boutiques to enter the business.

Mr. Burke said that investment advisers now manage $5 trillion of assets and banks only about $1 trillion.

"We've held our own," said Mr. Burke, adding that Bankers Trust and other big banks have had to sharpen their asset-gathering strategies in order to keep their edge.

Mr. Burke said that a push into the 401(k) market and indexing have kept his bank "near the top" of the asset rankings since the 1960's.

Mellon Bank Corp., for example, has grown through the acquisition of the Boston Co., a money manager that brought about $18 billion of tax-exempt assets.

Mellon also grouped its managers into several units serving different clients - Mellon Capital, an equity manager, seeks a different market than Mellon Bond, a fixed-income manager.

Totaling Mellon's units, which are currently ranked separately, would give the Pittsburgh-based bank $81,132 billion of tax-exempt assets, placing it fourth in that category.

"The market-share race is relatively close," said John J. Mulligan, president of Retirement Plan Strategies, a consulting firm that specializes in 401(k) plans. "You're talking about companies that have the ability to attract huge pension plans."

Indeed, the loss of about $1.652 billion in several such plans for SunBank Capital Management, a subsidiary of SunTrust Banks, has taken SunBank Capital to 79th place in tax-exempt assets, down from 55th place in last year.

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