With its blockbuster acquisition of Dreyfus Corp. four years ago, Mellon Bank Corp. instantly became a major player in the booming U.S. market for mutual funds. Now Mellon has set its sights on foreign markets.

So far this year, Mellon has forged five alliances with overseas fund companies in South Africa and Asia. And it is planning to buy a 75% stake in a British concern, Newton Management Ltd.

While U.S. expansion is continuing - Mellon agreed in April to buy Denver-based Founders Asset Management - the overseas push is clearly helping to build assets as well. At midyear, Mellon became the first bank with more than $100 billion of mutual fund assets under management. And it has broken into the top 15 among all U.S. fund managers, a feat once unimaginable for a commercial banking company.

In the recent spate of alliances, Mellon is trying to capitalize on a sweeping privatization of pension markets worldwide.

"We see a tremendous opportunity to capture and be on the front end of that growth internationally," says Christopher M. Condron, a Mellon vice chairman and head of its Dreyfus Corp. unit.

Mr. Condron, known as Kip, likens the global trend to the movement by Americans in the 1970s away from savings and deposits and into investments. In the United States, that movement was three-pronged. Consumers started out in money market funds, then moved into fixed-income investments, and finally into the equity market.

"That's beginning to happen in a lot of places, " said Mr. Condron. "We see it in Europe, in Japan, and in South America."

Diana MacKay, London-based European chief for Lipper Analytical Services, Summit, N.J., says the time is "very, very right" for companies like Mellon to be jumping on the privatization trend.

The growth in the pension business, she said, is especially strong in Europe, where state governments are trying to trim budgets in preparation for the launch of a single European currency, the euro.

"That puts enormous pressure on the governments' spending, and a big part of that is social security," she said. Many European nations that had offered "cradle-to-grave social security are now putting the burden of saving for retirement on the people themselves."

Mellon's immediate plans are to focus on the recent alliances and "get them cooking," Mr. Condron said. However, he does not rule out further expansion. "If we saw an opportunity, we wouldn't pass it by," he said.

That an executive of Mr. Condron's stature is piloting Mellon's burgeoning funds business underscores the company's commitment to the field. Mr. Condron, 51, is slated to become Mellon's president and chief operating officer, the No. 2 post. He currently holds those same titles for the company's main unit, Mellon Bank NA. Few other banking companies run their fund business from that high a level.

Mr. Condron grew up in investment management, joining Boston Co. in 1985 after stints at several companies, including his own Pittsburgh-based financial planning firm. Mellon bought Boston Co., an institutional asset manager in 1993. Mellon's purchase of Dreyfus, the first major bank acquisition of a mutual fund company, followed a year later.

"He's been in the asset management business - that's his career," said Frank V. Cahouet, Mellon's chairman. "He is a very bright guy with a very good sense of the market."

As he proceeds, Mr. Condron is not only amassing assets but further expanding Mellon's already-impressive distribution network. Dreyfus now distributes its mutual funds through "every single channel in the United States and we're building them in other countries around the world," said Mr. Condron.

Dreyfus is active in direct sales, third-party distribution through brokerage houses, banks and insurance companies, and in retirement programs. As a result, it has more than doubled gross sales of mutual funds over the last two years, according to Mr. Condron. Through July of this year, gross sales of funds stood at $9.5 billion, versus $4.5 billion for all of 1996.

The growth is evident to people doing business with Dreyfus.

"Dreyfus is one of the fastest-growing companies in our system," said Brendan Boyle, a senior vice president and director of mutual fund marketing at PaineWebber Inc., New York. And the funds are among the top sellers through the broker-dealer, he said.

Mr. Boyle attributes Dreyfus' success to good fund performance and the breadth of its products. A "terrific brand name" and the "ability to add value in distribution" by educating brokers have clearly helped Dreyfus, he said.

In a tribute to the strength of the Dreyfus name in the mutual fund marketplace, last July Mellon stamped the brand name on all its investment businesses.

That change made so much sense that some observers have wondered why it didn't happen sooner.

"Branding is a tricky thing," Mr. Condron said. "I wanted to make sure we could get it right."

He said that the change was designed to give all the investment businesses a common identity in the marketplace.

Several of the subsidiaries, including Boston Co. and Founders, retain their identities but are corralled under the Dreyfus name. Founders, for example, has made the Dreyfus lion part of its own logo.

The Dreyfus name and its ubiquitous lion symbol are indeed well known to investors. However, the name has been caught up in controversy in recent months, stemming from an investigation of alleged personal trading abuses by a fund manager, Michael L. Schonberg. Mr. Schonberg is accused of putting his own personal gain ahead of shareholders' interests in the two Dreyfus funds he managed and has been suspended pending an investigation. The investigation is ongoing and Mr. Condron declined to comment, citing pending shareholder lawsuits.

Meanwhile, Mellon, like all fund managers, is contending with turmoil in financial markets. But Mr. Condron professes to be unfazed.

"We're long-term players," he said. "The beauty of our franchise is that 37% of our assets are in equities and 53% in fixed income." As a result, he said, Dreyfus can provide a safe haven when the equity markets are volatile.

Dreyfus has long been criticized for its "below-average equity component," said Michael Mayo, a bank stock analyst with C.S. First Boston. "It's ironic that that criticism would become an area of strength."

In Mr. Condron's view, the international expansion should only strengthen the company's ability to withstand gyrating markets.

"A correction in one market or another will be balanced by our diversification into other markets," he said.

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