Citicorp is pushing headlong into the mutual fund business, but it is leaving at least one high-level executive behind.
The banking behemoth last week quietly launched CitiSource-a combined bank and brokerage account with access to a proprietary mutual fund supermarket. It is also building a dozen new mutual fund portfolios for its CitiSelect family of funds.
Amid all this activity, Peter Meenan, head of global funds, is leaving the bank, a spokeswoman confirmed. Mr. Meenan, a former Lehman Brothers managing director, joined Citibank amid much fanfare in 1995 to oversee Citicorp's worldwide portfolio of 250 mutual funds.
Mr. Meenan, who could not be reached for comment, is expected to stay at the bank through mid-October, according to Citicorp sources. No successor has been named.
For Citicorp, the flurry of activity highlights a desire to be a force in all facets of asset management. Though Citicorp is not new to the securities business, it has yet to compete for the do-it-yourself investors who discount brokers like Charles Schwab & Co. have a lock on. Other banks, including First Union Corp. and NationsBank Corp., have already entered the race for these customers.
Indeed, CitiSource is designed to appeal to self-directed investors, said Ken Danilo, the product's manager. The bank kicked off a pilot program for the product last week in Rochester, N.Y. It is slated to be widely available next year.
"We are reaching a whole target market-the self-directed investor-that up until now we have not effectively marketed to," Mr. Danilo said. "We want to broaden our product line and investment line to create the opportunity for those investors to do business with us."
CitiSource customers must keep a minimum balance of $5,000 in combined bank and brokerage accounts, or they are charged $6 a month. Customers receive an integrated statement with all their financial activities and holdings, Mr. Danilo said, and they can access their accounts and conduct transactions via phone or on-line.
The product's supermarket feature offers access to about 2,700 funds, 500 of which do not charge a sales fee. Among the funds available are those from Invesco Funds Group, Stein Roe & Farnham, and Strong Capital Management, Mr. Danilo said.
Citi is charging the fund companies 25 to 35 basis points on assets per year to participate in the fund mart-a price Mr. Danilo said is in line with those charged by other supermarkets.
Observers said banks must offer products like bundled accounts and fund supermarket or risk sending their customers elsewhere. Pioneered by Merrill Lynch & Co. 20 years ago, the bundled account is on its way to becoming a basic banking product.
"The reality is some people are going to want to deal with a bank, and so far they haven't been able to do this at a bank," said Diane M. Casey, partner and national director of financial services at Grant Thornton in Washington.
"If you want people to invest with you rather than with Merrill Lynch, you'll need to offer this," Ms. Casey added.
Details about the planned CitiSelect portfolios were not available. The funds, which will be asset-allocation portfolios, should be available by the end of the year.
Meanwhile, industry watchers said they were surprised by Mr. Meenan's plan to depart. Well regarded by colleagues at Citicorp and at Boston Co., where he led the institutional funds group before joining Lehman, Mr. Meenan helped roll out the CitiSelect funds last year.
The portfolios, considered Citicorp's first big splash in the U.S. mutual fund business, had $1 billion under management on July 31, according to Lipper Analytical Services of Summit, N.J.
Mr. Meenan joined Citibank under David J. Browning, who left his post as head of Citi's investment products and distribution group after one year. Mr. Browning was succeeded by Citicorp's former private banking chief, Hubertus M. Rukavina, in January 1996.
