Fleet Financial Group Inc. would bring the bulk of the investment management business to its planned merger with BankBoston Corp.
Fleet manages $84.1 billion of assets, BankBoston about $29 billion.
Roughly $10.7 billion of the $18 billion under management in Fleet's Galaxy Funds are in retail shares. Sales of the Galaxy Funds increased 85%, to $840 million last year, after a broad-based advertising campaign.
Fleet also expanded its investment management stable by acquiring the Portland, Ore., money manager Columbia Asset Management in 1997. Columbia manages $19.7 billion of assets, including a mutual fund family with $7 billion.
By comparison, the Boston 1784 Funds had $9.3 billion under management at yearend. BankBoston does not disclose sales. The family had net inflows last year of $1.6 billion, including a $36 million net outflow from long- term funds, according to Financial Research Corp. of Boston.
BankBoston also sells proprietary funds in Latin American countries, including Argentina, where it is the largest mutual fund manager, with $1.5 billion of assets.
Though the U.S. fund families of Fleet and BankBoston are heavily weighted toward money market mutual funds, observers said, combined they would generate fee income more efficiently-especially through Fleet's larger brokerage capability.
Fleet gained a powerful sales outlet last year with the acquisition of Quick & Reilly, a discount broker with 300 representatives.
"The more product you have and the more customers you have, the more dollars you have for marketing," said J. Mark Naber, a managing director at Optima Group Inc., a consulting firm in Fairfield, Conn.
Meanwhile, BankBoston's brokerage unit has 50 series 7 licensed brokers and had initiated a program this year to train 75 branch employees as series 6 brokers.
No decision has been made on whether to combine all investment services under the Quick & Reilly banner, a BankBoston spokesman said.
However, the U.S. fund families' strong points are complementary. BankBoston's municipal and corporate bond funds have strong track records, as do some Fleet equity funds, including its small-cap, Standard & Poor's 500, and utility portfolios.
Fleet has been expanding its investment businesses under the leadership of Gunnar S. Overstrom Jr., a vice chairman who is resigning when the merger closes. Bradford H. Warner, BankBoston's vice chairman in charge of retail banking, is to oversee investment businesses for the combined banking company.
Though a BankBoston executive will be holding the reins, observers said Fleet's heft should drive a large part of the combined operation. Fleet's investment management and distribution are considered by some to be advanced.
"For a bank they have their act together," said Eli Neusner, a senior consultant in Boston with San Francisco-based Spectrem Group.
Fleet Boston Corp. would be well served by BankBoston's strengths in institutional asset management, Mr. Neusner said, referring to the active investment management style led by chief investment officer Edward G. Riley Jr.
BankBoston units suffered negative publicity last year. BankBoston Investor Services, the retail brokerage, settled this month with the Massachusetts Division of Securities to close an inquiry into its sales practices. BankBoston agreed to pay $22,000 to cover the cost of the investigation, which started in July.
The investigator ended the inquiry by saying he was satisfied that the bank had begun mandating documentation of the suitability of trades from one mutual fund into another.
And the private bank, a division that manages assets for institutional and individual investors, took some knocks last year when it was discovered that an executive in New York had made $73 million of illicit loans.
Nevertheless, "Fleet is a beneficiary in terms of BankBoston's products and services targeted to the affluent," said Mr. Naber of Optima Group. He called BankBoston's private bank "effective" in customized investment management and trust services.
The organizational chart under Mr. Warner is being decided on, the BankBoston spokesman said. Many executives had left long before Sunday's announcement of the merger deal.
The head of Fleet's private-client group, Doris P. Meister, is expected to join Merrill Lynch & Co. this month as chairman of its trust companies.
And senior executives in BankBoston's investment businesses left last year and have not been replaced. They include the head of global asset management, Guilliaem "Rusty" Aertson, and brokerage executives Allen W. Croessmann, who oversaw the 1784 Funds, and Cynthia Winslow.
"There's been a mild bit of turmoil on the mutual fund and brokerage side, and Fleet will be able to steer them," said Mr. Neusner of Spectrem Group.
