Bank of Boston Corp. has joined the growing list of banks looking to brokerages to help boost trust business.
The banking company has teamed up with PaineWebber Inc. to market trust products in Massachusetts, Connecticut, Rhode Island, and New Hampshire. Clients of PaineWebber's 24 offices in those states will be sent to Bank of Boston for some of their trust banking needs.
The agreement is similar to one PaineWebber, the nation's fourth-largest brokerage, inked with Detroit's Comerica Inc. last November. That alliance is now in under way in California, Texas, Michigan, Florida, and most recently, New York.
The novel alliances are grabbing attention because they mark the first time that banks and brokers have agreed to share clients.
"Management's thinking has progressed. We used to be fierce competitors" with brokers, said Robert H. Frey, Bank of Boston's chief fiduciary officer. "Now the thinking is forward."
Bank of Boston is something of a pioneer when it comes to strategic alliances and joint ventures, said Susan P. Haney, group executive for domestic asset management. In mortgage circles, the bank is well known for its involvement in HomeSide Lending Inc., an origination and servicing joint venture with Barnett Banks Inc.
Ms. Haney declined to estimate how many trust clients the deal with PaineWebber would provide but said she expects the number to be significant. "Those are new clients we would not have had."
Under the agreement, PaineWebber will refer its clients to the bank for trust services it does not provide, including trust administration, management of closely held businesses, and estate settlement and loans. The brokerage is not interested in providing these services itself, officials said.
"All we are doing is managing resources, so why would we need our own trust department?," said Robert Bethoney, PaineWebber's director of insurance, estate planning, and personal trust.
But PaineWebber does not simply hand books of business over to the banks with which it deals. The brokerage manages $49 billion in trust assets in its own right, Mr. Bethoney said.
"When the client passes on, assets stay with PaineWebber. It's a retention consideration," he said.
In addition to Bank of Boston and Comerica, PaineWebber works with eight independent, local trust companies. The brokerage does not disclose the terms of its alliances or any fee-sharing arrangements.
PaineWebber's deal with Bank of Boston geographically places the brokerage in 95% of the trust market. It typically works with banks with locations close to its brokerage offices. For instance, PaineWebber has a branch in Bank of Boston's headquarters.
"Now PaineWebber is one of the best-positioned trust providers in the country," said John W. Emery, its manager for personal trust services.
PaineWebber is not the only brokerage to align itself with a trust bank. This summer, Delaware's Wilmington Trust Corp. struck accords with Morgan Stanley & Co.'s private client group as well as Boca Raton, Fla.-based brokers J.W. Charles Financial Services Inc.
