BankAmerica Buys Unit That Sells Mutual Funds at Its Branch Offices
BankAmerica Corp. has bought the operation that sells mutual funds and tax-deferred annuities at the bank's offices in California.
The San Francisco-based banking company said last week that it had exercised an option to acquire Securities, Annuities and Insurance Services Inc. from GNA Corp., a Seattle company that markets investment products through financial institutions.
GNA had been selling mutual funds and annuities through Bank of America's 825 California branches since 1988.
Under the deal, whose terms were not disclosed, about 200 GNA employees shifted to the bank's payroll.
A Standard Option
Citibank made a similar move in April, and observers suggest that other institutions will bring their investment programs in house before long.
"Most banks that have brought in people to sell these products in their branches have contracts with their vendors that say (that) if the bank should want to, it can buy the program," said Edward Furash, president of Furash & Co., a bank consulting firm in Washington, D.C.
Banks can sell insurance and other investment products to consumers in a more "seamless fashion" through their own sales forces, Mr. Furash said.
Name Will Change
BankAmerica, for example will change the name of its program from the Investment Network of America to Bank of America Investment Services.
"By having the employees become Bank of America employees, they will be able to do a better job meeting the customers' needs," said David Weymouth, head of the bank's new consummer financial services division.
A Growing Area
The investment unit set up by GNA and BankAmerica Corp. has sold $1.8 billion of investment products to 50,000 Californians in the past three years.
"Consumers have indicated to us that they are increasingly interested in the ability to acquire securities products," Mr. Weymouth said.
He predicted that annuities, mutual funds, and other investment vehicles will become an increasingly important part of the bank's consumer product line.
The bank will continue its relationship with GNA by marketing its annuities and mutual funds.
Unlike the Citicorp transaction, Bank of America's involves acquiring some of the assets and liabilities of the GNA unit.
Citibank merely shifted 140 brokers of mutual funds and annuities to its payroll from that of Landmark Financial Services, Oklahoma City.
GNA, a subsidiary of Weyerhaeuser Co., has marketing relationships with 110 financial institutions across the country. According to Lawrence Blonquist, a GNA senior vice president, most of those contracts give the institutions the option to buy their investment programs.