PNC Bank Corp. is in negotiations to market its $10 billion-asset mutual fund family through Merrill Lynch & Co., PaineWebber, and other major brokerage firms, sources close to the talks said.
Sales agreements could be signed within the next six weeks.
The move would put PNC in the company of such industry leaders as Chase Manhattan Corp. and NationsBank Corp., which have made solid progress in reaching investors outside their own customer base.
The ability to rack up sales through nonbank brokerages is considered a mark of maturity for a bank-managed fund family.
"We're setting the stage for what we hope will be a massive ability to access more brokers, and more customers," said Karen Sabath, president of Compass Capital Group, PNC's New York-based asset management unit.
She estimated that deals with unaffiliated brokerages will connect PNC with as many as 50,000 additional brokers.
The vehicle for PNC's drive to sell its proprietary mutual funds beyonds its branch walls is its Compass Capital Funds family. The fund family was formed last week through a merger of three separate mutual fund businesses.
PNC combined its $7.5 billion-asset PNC Funds with two fund businesses it acquired over the last year, when it bought Midlantic Corp., a New Jersey banking company, and BlackRock Financial Management, a New York money manager.
The Compass Capital Funds are now being sold through PNC's 228 brokers and 150 trust officers and through 20 financial planners who are not affiliated with PNC, said Salvatore M. Capizzi, national sales manager.
But some observers say PNC has a long road ahead of it before brokers will take notice.
"You need to look at building a distribution infrastructure on a three- to five-year time horizon," said Avi Nachmany, a partner at Strategic Insight, New York. "You need experience, and you need time to execute the strategy - and I'm not sure of how many banks are willing to wait that long."
Many of the Compass Capital Funds can boast a three-year track record, or longer, but some of the portfolios are much younger. And because PNC chose to go with Midlantic's lesser-known Compass moniker for the new fund family, the company will have to build name recognition almost from scratch.
Ms. Sabath said she is unfazed, and that the company will be aggressive in courting new business. The Compass Capital unit has already hired one salesperson to push the funds outside the bank channel, and has plans to hire five more by yearend, she said.
