Barnett to Offer Investment Banking Under an Agreement with Stephens

Will Barnett Banks Inc. provide investment banking services to its corporate clients under an agreement with Stephens Inc. the Little Rock investment banking firm.

The move comes as Congress debates repeal of the Glass-Steagall Act, the Depression-era law that prohibits investment banks and commercial banks from merging.

Banks currently are allowed to create what are known as section 20 subsidiaries, units that perform some underwriting and advisory functions. But full-fledged investment banking powers are denied.

The Stephens-Barnett combination will function essentially as a referral service: Stephens will pay Barnett a referral fee for all Barnett customers the bank sends to the Arkansas firm.

At the same time, Barnett, based in Jacksonville, Fla., will be able to offer one-stop shopping to its corporate clients.

Barnett, which has an inactive section 20 subsidiary, decided the Stephens deal would be more cost effective than starting a new unit from scratch, said Sam Northrop, Barnett's director of commercial banking.

Mr. Northrup would not speculate whether Barnett would buy an investment bank if Glass-Steagall were repealed.

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