NBD Bancorp pulled the plug on a plan to offer investment services to 12 correspondent banks after some of them raised concerns about sharing customer lists with the regional powerhouse.

Officials at Essex Corp., a New York investment marketing firm that was NBD's partner in the aborted plan, said some of the banks got cold feet after NBD purchased a majority share in an insurance company that was to supply many of the investment products.

One bank, in particular, worried that NBD's 80% stake in Charter Oak Insurance Agency, Lathrup, Mich., presented a "conflict of interest," said Susan Blenman, a program director at Essex who works with NBD's brokerage division, Charterpoint Investment Services. She would not identify the bank.

NBD, based. in Detroit, disclosed last month that it was withdrawing from the partnership, but did not discuss the reasons.

The plan had called for NBD and Essex to offer the Charterpoint Investment Services program to other banks that have business relationships with NBD.

In the past two years, several major banks have announced plans to "syndicate" their brokerage services programs. The idea is to squeeze fresh business out of correspondent relationships while creating new sales outlets for proprietary mutual funds. But only a few such programs have taken off.

The partnership between NBD and Essex had the potential of generating a steady flow of new business for both. A spokesman for the Michigan Bankers Association said that with about 120 banks, "NBD is the unquestioned correspondent leader in Michigan."

NBD is sticking with Essex as its investment products marketer. But the banking company will no longer actively feed Essex with referrals or be involved in the sales programs of the 12 community banks that signed up with Essex at NBD's suggestion.

Russell E. Browne, first vice president at NBD's retail investments and insurance unit in Farmington, Mich., said plans were progressing smoothly until NBD invested in Charter Oak in April.

Community banks that had been "reasonably comfortable with us providing them investment services" proved to be "not so comfortable with us also processing all their insurance product sales," Mr. Browne said.

"It wasn't a big deal, but in conjunction with all the other concerns we just decided to hand everything over to Essex."

Mr. Browne said other problems cropped up as well. For instance, NBD had doubts about whether the small banks could be adequately supervised and supported under the arrangement.

"It was not going to be cost-effective to give sales and compliance management to these banks," said Mr. Browne. "These banks simply do not generate the funds to do it."

The president of one Michigan community bank said he is sticking with the program even though .NBD has pulled out. NBD's withdrawal from the partnership was "transparent" to his bank, he said.

"NBD brought Essex to us," he said. "There's no doubt that we wouldn't be with Essex if it were for them."

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