Chase Manhattan Bank said a Fidelity Investments unit will do record keeping and trustee services for $2.6 billion of 401(k) assets that Chase manages.
The assets have been serviced by a Chase in-house processing unit in Houston, which will be closed, said James T. Buccella, a managing director at Chase Global Asset Management and Mutual Funds, a subsidiary of the banking company. About 100 people will be "displaced," and the parent company is working to find posts for them, Mr. Buccella said.
The deal, announced Thursday, affects about 600 small to midsize daily bundled 401(k) plans - retirement plans in which participants have access to services such as daily valuation of their holdings - Mr. Buccella said. By teaming up with Fidelity, the nation's biggest provider of such services, Chase can offer its customers a better package, he said.
Fidelity's deal with New York-based Chase is something of a coup. Chase is the first money-center bank to sign up with the Boston-based fund company for bundled services, said Jude Metcalfe, a senior vice president at Fidelity Investments Institutional Services Co., the servicing unit of Fidelity Investments.
Fidelity, which does similar services for two trust banks that manage 401(k) assets, is talking with several other major banks, a spokesman said. It plans to add "half a dozen" such banks by yearend and has a goal of adding three to six per year thereafter, he said.
Chase's 401(k) program offers a package of Chase Vista Funds, portfolios from Fidelity Advisors, and funds from other third parties, Mr. Buccella said. The banking company manages $240 billion of assets, including other pension assets.
Fidelity was servicing 401(k) plan assets totaling $304.4 billion at yearend and was keeping records for 7,500 plans, with 6.3 million participants.