Banks are snapping up U.S. money management firms at a record pace this year, but the biggest prizes are going to rival buyers.

Banks landed 12 of the 49 money managers that changed hands in the first eight months of the year, making them the largest single category of acquirers, according to Berkshire Capital Corp., New York. So far this year, firms with cumulative assets of $386 billion have been sold.

If deals continue at this pace, banks should top last year's record of 16 deals. In all, 54 money management firms with $430 billion of assets were sold in 1994, Berkshire said.

But while banks have racked up an impressive number of acquisitions, they generally have gone after the smaller properties to hit the market, according to Jeffrey D. Lovell, a principal with Putnam, Lovell & Thornton, an investment bank in Los Angeles. A notable exception is Wells Fargo Nikko Investment Advisers, with $171 billion in assets, which went to Barclays Bank PLC.

More typically, the buyers have been U.S. regional banks seeking to bulk up their investment capabilities. These banks are acquiring small firms on their own turf, generally with price tags under $100 million, Mr. Lovell said.

He cited Chicago-based Northern Trust Corp.'s acquisition of RCB International, a $4.4 billion-asset money manager, and New York-based U.S. Trust Corp.'s purchase of J.& W. Seligman's trust business, with $900 million of assets, as characteristic of the trend.

Why are banks going after these firms?

As aging baby boomers shift from spending to saving, they are amassing a vast pool of assets, which is expected to grow to $3 trillion by 2010, according to a Cornell University study.

Banks are eager to get in on the action, because of the hefty fees that come from managing assets, whether for individuals or for retirement plans.

Just this week, NationsBank Corp. signaled its interest in Gartmore PLC, a British money manager with $34.5 billion under management. The companies already operate a joint venture, Nations Gartmore Investment Management, with $750 million under administration.

But other big players, such as Chase Manhattan Corp. and Banc One Corp., have sat out the money management acquisition frenzy this year.

"They're the ones that could be competitive in acquiring larger-size companies, because they are prepared to take dilution, but they have been more active in (bank) mergers," Mr. Lovell said.

Indeed, banks that are caught up in the merger frenzy are having a tough time competing for money management firms, observers said.

"No institutional investment manager in his right mind is going to do a deal with a big bank going through a merger," said Peter L. Bain, a principal of Berkshire. "It doesn't mean they're not viable - it's just on hold until the banks sort out their own post-merger investment management structure."

"Four or five institutions I've worked for would be active bidders if it weren't for their current merger activities," added Geoffrey H. Bobroff, principal of Bobroff Consulting, East Greenwich, R.I.

But despite the distractions bank mergers create, Mr. Bobroff does not see them stemming the tide of money management firm deals. He attributes the trend to a desire by banks to create and distribute more investment products.

"The bank mergers will continue and a trend of acquisitions of money management firms will, too," Mr. Bobroff said.

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