Can a billion-dollar trust operation be run by five people? Banco Santander Puerto Rico intends to find out.

The $3.6 billion-asset bank, a subsidiary of Spain's fifth-largest financial institution, started up a trust department last November. It has since amassed $240 million in discretionary assets. Bank executives expect the operation to grow to $300 million by yearend and $1 billion by 1996.

Despite those projections, Banco Santander Puerto Rico plans to add only one employee to the four who began with the unit eight months ago.

Extensive Automation

The low staffing level is made possible by a strategy of automating nearly every aspect of the trust business, from custody reconciliation and reporting to investment modeling.

Existing systems and staff are expected to handle up to twice the current trust asset base. And to accommodate projected growth through 1996, the bank need only expand its computer capacity.

"The key is that our staff is not growing along with our asset size," said Manuel E. Sarmiento, vice president and executive trust officer. "It's clear to us that good margins are largely dependent on keeping overhead down."

Banco Santander is using software from National Computer Systems Inc., Atlanta, and hardware from Digital Equipment Corp.

Asset-Management Data

On the most basic level, the system automates the labor-intensive process of tracking and reporting on assets under management.

The NCS software creates an on-line interface through which Banco Santander's computers can accept income and settlement data from State Street Bank & Trust Co. - a subsidiary of State Street Boston Corp. that physically houses about 90% of Banco Santander's trust securities. Once received, the data are automatically posted and reconciled to Banco Santander's computer files.

The Puerto Rican bank also has installed more sophisticated software modules to improve the returns from its trading operations. Specifically, the system compares prospective trades to computer-generated models and advises bank employees on what to buy or sell.

"The trading stuff is pretty progressive for a bank that size, but without it, they'd definitely have to be adding people," said Jeff McCuen, regional sales manager for National Computer Systems.

Shorting Customer Service?

Though trust departments tend to be among the most automated in banks, experts said the amount of technology employed by Banco Santander is unusual, and perhaps even extreme.

Thinly staffed trust operations are unlikely to be strong in trust's traditional strong suit of customer service, these experts reasoned.

Banco Santander's Mr. Sarmiento cited statistics to counter such arguments. His staffing level allows Banco Santander to charge low prices, attracting business.

"Giving out comprehensive information is the best service we can offer," the Banco Santander executive said regarding customer service. "We wouldn't be doing it any better with twice as many people."

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