Continuing its drive to be a leader in shareholder services, Harris Bank has agreed to acquire Banc One Corp.'s stock transfer business for an undisclosed sum.
The deal was the sixth for Chicago-based Harris in the last two years, a spokeswoman said, and it continues a trend toward a shrinking number of players in the market.
Harris acquired transfer agent, dividend disbursement, and dividend reinvestment services from Banc One, as well as proxy processing and stock registration.
"It's one niche that they've identified and that they'd like to grow in," said analyst Wendy Gleichmann of Merrill Lynch. "Shareholder services is an area where they would really like to be one of the leaders."
Harris, in fact, said it has grown to No. 5 among shareholder service banks in the United States, with more than 400 clients. The others, in order of size, are Chemical Mellon Shareholder Services Corp., First Chicago Trust Co., BancBoston State Street Investor Services, and Bank of New York Co.
"Harris Bank has been growing its shareholder services business by more than one account per week for the past five years," said Steven R. Rothbloom, a senior vice president and group executive in Harris' corporate trust department. "The agreement with Banc One adds critical mass."
The consolidation in shareholder services, according to analysts, is a function of the need for huge economies of scale, as well as the difficulty of keeping pace with the nearly constant demands for new technology.
Even banks with hefty shareholder service units are quitting the business.
For Banc One, which is based in Columbus, Ohio, and has assets of $86.8 billion, it made more sense to farm out the work rather than to try to compete with banks like Harris.
"They probably have certain economies of scale that we just don't have," said Johanna White, a Banc One spokeswoman.
Harris, a division of Bank of Montreal, has $17.1 billion in assets.