State Street Boston Corp. is about to gain a foothold in the Midwest with a deal to buy the corporate trust business of Mercantile Bancorp.

The purchase price was not disclosed in the Wednesday deal for Mercantile's 830 accounts and $6.9 billion bond portfolio, although the St. Louis-based bank said it would post a gain worth about 8 cents a share in the fourth quarter.

The deal is expected to close Oct. 15.

State Street acts as trustee and paying agent for more than $300 billion of outstanding bonds nationwide. Because Mercantile's portfolio is small, the acquisition mostly serves as a marketing opportunity for State Street, said George Bird, executive vice president, corporate services division.

"Strategically, it does fill in a marketing presence for us in the heartland of the country," Mr. Bird said. "What we're able to gain is a foothold in a very high potential marketplace."

Under the agreement, State Street will open an office in St. Louis in October, staffing it with former Mercantile administrative and customer service employees but employing its own technology.

State Street has offices in Boston and Los Angeles, but no corporate trust operation in between. The company's Investors Fiduciary Trust subsidiary does have an office in Kansas City, Mo.

Investors Fiduciary provides custody and fund accounting services to mutual funds, insurance portfolios, and bank portfolios.

Mr. Bird said State Street planned to use the Mercantile bond portfolio as a springboard to capture additional corporate trust business in the midwest.

The State Street/Mercantile agreement, State Street's third purchase of a corporate trust operation in less than a year, comes one day after First Chicago NBD Corp. announced plans to refer all its master trust and institutional custody business to Northern Trust Corp.

Analysts said the deals illustrate the rapid consolidation occurring in the technology-intensive corporate trust area.

"It just makes more sense for players the size of Northern Trust and State Street to be in on it," said David Winton, an analyst with Keefe, Bruyette & Woods Inc. "They have the scale, and it is profitable for them. If you don't have the scale, this thing doesn't make you a lot of money."

John H. Beirise, Mercantile's group president for emerging markets, agreed that small players have a hard time staying in the corporate trust game.

"It's become a business of large numbers and very thin margins and is increasingly dependent upon technology to make it pay," Mr. Beirise said. "We concluded we'd be better off to invest our capital in other ventures where we'd have more scale."

Mr. Beirise added that Mercantile was not woried about State Street using the corporate trust business as a platform to take other business from the St. Louis bank.

"What we've transferred to State Street is a specialized business and specialized functions, and with the rest of the businesses that we're staying in, we're fully capable of providing high quality service," Mr. Beirise said. "There would be no need or incentive for our customers to consider an alternate provider."

State Street, with $2.6 trillion of assets under custody and $271 billion under management, is the largest master custodian in the United States and the nation's No. 1 provider of mutual fund and pension services. Targeting corporate trust as a particular area of expansion, it purchased the corporate trust units of BayBanks Inc. and Bank of Boston Corp. in May 1995 and June 1995 respectively.

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