The nation's biggest banks, which have been expanding their expertise as investment managers, are now poised to compete directly with major brokerage houses. Once content to market special investment services to wealthy clients only, banks are intent on becoming full-service brokers of numerous products and services to a greatly expanding group of pre- retirees-commonly referred to as private banking wannabes-who are building significant assets in 401(k) plans and IRA accounts.

With major brokerage houses offering deposit accounts and other traditional bank services, banks stand to lose big if they fail to meet the competition head on. Analysts expect banks to step up their efforts to buy smaller brokerage houses (see BT Merger sidebar) in the coming months, and a spot check indicates that some leading banks are keeping their options open.

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