BellSouth Picks Hanover For Shareholder Services
Manufacturers Hanover Trust Co. has been named shareholder-services agent for BellSouth Corp., the No. 2 company in number of stockholders.
The multimillion-dollar contract announced last week to serve BellSouth's 1.4 million stockholders is a coup for Hanover, which stayed in shareholder services as other big banks were dropping out because of declining profits.
The bank unit of Manufacturers Hanover Corp. beat out First Chicago Corp., another banking company that has opted to stay in the business and the leading supplier of shareholder services.
7 Regional Pacts Sought
First Chicago, Hanover, and other companies that still offer shareholder services are vying for contracts to be agents for the seven regional phone companies.
They, as well as their former parent, American Telephone and Telegraph Co. -- which has the most widely held stock in the country -- formerly used an AT&T subsidiary, American Transtech, for shareholder services. Transtech decided to get out of the business last summer.
Each telephone company has requested bids from other agents. With seven million shareholders combined, they have the biggest portfolio of stock-transfer business in the country. The business involves tracking stockholders and disbursing dividends, among other functions.
Bankers said the other Bell companies are expected to award contracts to agents within several weeks.
"It's quite a competitive situation," said D'Arcy LeClair, managing director of Hanover's corporate and institutional trust group. "This is very big business that the other servicers would like."
Hanover will become transfer agent, registrar, and dividend disbursing and reinvestment agent starting next June. Mr. LeClair said the trust group will have to add employees to handle shareholder inquiries and manage the account. He did not specify how many people would be hired. The unit employs 500 to 600 people and is shareholder agent for 700 corporations.
Mr. LeClair said Hanover won the contract by pricing its services competitively and through offering a high level of quality service. "We've stayed in the business because we have the scale," he said.
Many banks left the business because it is both technology- and labor-intensive, requiring many shareholders to be profitable. Also, mergers and acquisitions and the trend toward holding securities in institutional investment accounts with Wall Street firms have reduced the number of shareholders.
Chemical Banking Corp., J.P. Morgan & Co., and BankAmerica Corp. have left the business in the last five years.