Fidelity Investments has reshuffled the management of its bank sales group in response to banks' moves to integrate their investment departments.

William O'Grady, Fidelity's executive vice president for distributors services, named Nishan Vartabedian to oversee all sales through banks.

The appointment of Mr. Vartabedian, a Fidelity veteran, to this new post comes in response to moves by several large banking companies that are blending their trust departments, broker-dealers, capital markets, and private banking divisions under one executive. In recent months, Mr. Vartabedian's role with Fidelity had been limited to serving bank trust departments.

Alluding to this consolidation of investment product functions within banks, Mr. O'Grady said, "We can probably name 15 banks that are going in that direction or are there already."

The fund company has also hired Richard Tinervan, a former executive vice president at NationsBank Corp.'s trust division, to replace Mr. Vartabedian in the trust area.

And Mr. O'Grady has promoted Andrew Olear 2d to national sales manager, supervising sales through the retail side. Previously, Mr. Olear oversaw sales to banks in the East.

Mr. O'Grady said he hopes to boost sales through banks in excess of $1 billion at the end of this year, slightly above 1994's results.

While Fidelity, which manages $292 billion in fund assets, is the nation's largest fund company, the fund behemoth has continued to rank behind some smaller competitors, including Putnam Investments and Franklin Resources, in sales through banks.

For the past two years, Fidelity has been inconsistent in the way it approaches banks.

For instance, Mr. Vartabedian held a similar position to his current post in 1993.

But in May of last year the company split its bank services division in two. Mr. Vartabedian was given trust departments, and David Liebrock, who had reported to Mr. Vartabedian, targeted bank broker-dealers.

The company went through a second round of changes four months ago, when it hired O'Grady from Alliance Capital Management, putting him in charge of sales through all of the company's distribution channels. Mr. Liebrock was then promoted to executive vice president for strategic marketing.

Mr. Vartabedian said competition to get into the bank channel is fierce because some fund companies fear they will get locked out forever.

Banks used to have different short lists of mutual funds in each department, sometimes developing 15 different relationships with fund companies across the bank, he said. But now those banking companies are trying to develop more comprehensive relationships with a smaller number of firms, as few as two in some cases, he said.

Moreover, Fidelity's name recognition isn't necessarily it's strong suit when it approaches bank clients.

For banks, whether to let Fidelity carve out such a heavy position inside their walls is a tough question, said Glen Casey, a consultant with Cerulli Associates, Boston.

On the one hand, he said, the fund company has so much name recognition that customers demand its funds. On the other hand, banks that sell Fidelity funds thereby lose market share for the funds they manage.

Bank trust departments have "a love-hate relationships ... with firms like Fidelity," Mr. Casey said.

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