Banc One Corp. is getting ready to internalize some key administrative functions for its proprietary mutual funds.
By the end of the first quarter, Banc One will assume responsibility for servicing shareholders of its $8.7 billion-asset fund family, according to Eric M. Rubin, managing director of Banc One Investment Advisers Corp., a money management arm of the Columbus, Ohio, banking company.
The company has also received regulatory approval to act as administrator for its $8.7 billion-asset fund family, he said in a recent interview.
Banc One had been rumored for months to be mulling such plans. Indeed, the company was so intent on "unbundling" its mutual fund contracts that it came close last November to dropping its fund distribution contract with 440 Financial Corp. The Worcester, Mass., company was said to be resistant to the changes.
After considerable internal debate, Banc One renewed its contract with 440 for a year. Banc One officials have declined to comment on the matter.
But whatever the reasons, it now appears the two organizations are working to satisfy Banc One's desire to gain more control over its funds business.
In the interview, Mr. Rubin said Banc One would be interested in distributing its funds - that is, setting up its own sales contracts with banks and brokers - if such activities were permitted under the Glass- Stegall Act.
The company's aim, he said, is to boost mutual fund revenues by gaining greater control over its proprietary fund family, the One Group of Funds.
Indeed, he is aiming high: "I think that one day we can be better than Fidelity Investments," Mr. Rubin said, referring to the nation's largest mutual fund company.
Still, Banc One has a long way to go before it achieves the ambitious goals set out by Chairman John B. McCoy.
He said last August that retail sales would boost the proprietary funds' assets to $10 billion of assets by the end of 1994.
Instead, sales slowed to a crawl. Banc One's net sales of stock and bond mutual funds totaled $411 million in 1994, down from $1.421 billion in 1993, according to data prepared by Financial Research Corp., Chicago. Some of 1993's firepower came from conversions of trust assets.
And now, with Banc One planning to shut 100 branches and eliminate 4,300 positions, fund sales may suffer further, industry observers say.
"If they're cutting back severely this year, there is bound to be some fallout on the mutual fund side," said Dennis Dolego, partner at Financial Research.
More favorable market conditions and better performing funds should help temper the impacts, Mr. Dolego said.
Banc One is also rebuilding after the resignations last year of three top executives, and several mid-level people, in the investment products arena. It is clearly a sensitive point with Banc One executives.
"We were never a ship without a rudder," Mr. Rubin said. Mr. McCoy, he said, "has always been at the helm of this ship."
Mr. Rubin said, emphasizing that the chief has had a clear vision for the company's investment products program.
Another key change under way at Banc One is a move to limit the range of unaffiliated mutual funds offered to retail customers.
Though the company drew up a short list of four mutual fund providers last year, it has continued to sell products from more than 100 companies.
Mr. Rubin said Banc One will begin enforcing its short list by April 1.
That should cheer the mutual fund companies that made the cut, some of whom have expressed puzzlement over Banc One's failure to stick with its choices.
In addition to the One Group of Funds, products from Alliance Capital Management, Fidelity Investors, and Kemper Financial Services made the short list.
