National Commerce Bancorp in Memphis has signed up with Morgan Stanley, Dean Witter & Co. for asset management.
In an announcement Friday, the bank said it will turn over 85% of its $1.5 billion of assets under management to Morgan Stanley Asset Management, to be invested through subadvised separate accounts and mutual funds.
Assets whose management will change hands include most of the $300 million in the bank's five proprietary Riverside mutual funds, which are scheduled to liquidate April 3. Shareholders will be offered Morgan Stanley funds. (Tennessee municipal bond assets, including $18 million in a local bond mutual fund, will continue to be advised by the banking company.)
National Commerce's 50 asset management and trust employees will also continue to provide customer service. They will decide how to allocate clients' assets to Morgan Stanley investment accounts and funds.
Morgan Stanley Asset Management has over $338 billion under management. The alliance is part of its new strategy of taking on more investment management from banks, which until now have used its mutual funds only on a limited basis.
"We are very serious about making a major impact in the banking channel," said Paul Krug, a principal of Morgan Stanley.
He added that the firm will be making a "serious push" into banks.
Representatives of Morgan Stanley Asset Management have been meeting with individual and institutional clients of National Commerce since the middle of February, under a contract signed by the companies last September.
To oversee its own side of the alliance, National Commerce hired Russell M. Niemie as group head of asset management and trust. Mr. Niemie had been a client of Morgan Stanley in his previous job as chief investment officer for the Texas employee retirement system.
Most regional firms realize they cannot hire staff with the quality of Morgan Stanley's, Mr. Niemie said. "This seemed a better direction to go."
National Commerce plans to extend investment services into Virginia, North Carolina, Georgia, and Mississippi. The company offers investment services in Tennessee through its two asset management subsidiaries, Commerce Capital Management in Memphis, and Brooks, Montague & Associates Inc. in Chattanooga.
There has recently been a spate of arrangements between banks and investment managers.
Another Memphis-based banking company, $18.1 billion-asset Union Planters Corp., has had portfolio managers from Federated Investors onsite in bank offices since last summer, to manage separate accounts for affluent and institutional investors.
Union Planters, which has over $1.2 billion of assets under management, maintains control over the accounts by approving the portfolio managers' decisions.
