Furman Selz, a New York investment bank, is exiting the mutual fund servicing business through a deal with the Bisys Group.

Furman has agreed to refer clients of its fund administration and distribution unit to Bisys, Little Falls, N.J. Details of the deal, which calls for Bisys to pay Furman Selz a commission for its referrals, were not disclosed.

The move further strengthens Bisys' No. 1 position in the rapidly consolidating bank-mutual fund servicing business. As of March 31, Bisys was servicing bank fund clients with a total $76.2 billion in proprietary fund assets, according to Lipper Analytical Services. At the same time, Furman Selz was handling $18.7 billion in bank fund assets.

"Bisys is the (most) powerful organization in this business and is determined to dominate," said a rival who asked not to be named. "They're a determined group."

In the fourth quarter, Bisys will take an unspecified charge against earnings, representing commission paid to Furman Selz, said Robert J. McMullan, Bisys' chief financial officer. He predicted that Bisys would add about $8 million in revenue on an annualized basis as a result of the deal, which is expected to close within 60 days.

An undetermined number of Furman Selz employees will be offered jobs with Bisys, executives from both companies said. Furman Selz's fund- servicing unit currently employs about 85 people, a spokeswoman said.

Increasingly, Furman has been feeling the pressure of bank consolidation on its book of mutual fund servicing business. Three mutual fund families - accounting for $9.1 billion of assets, or half the assets Furman Selz services - are set to be swallowed by bank fund complexes that use other vendors.

Chemical Bank's Hanover funds, for instance, are due to merge with Chase Manhattan Bank's Vista funds, while Fourth Financial Corp.'s proprietary funds are to be absorbed by Boatmen's Bancshares' funds. Both surviving fund complexes already use Bisys as administrator and distributor.

Another Furman client, First Interstate Bank's Pacifica funds, are set to be acquired by Wells Fargo & Co.'s StageCoach family. Wells relies on Stephens Inc. of Little Rock, Ark., for its fund administration and distribution needs.

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