While Wall Street firms and money managers courted mutual fund companies and asset managers last year, commercial banks were like wall flowers as they watched expensive deals pass them by.

The only bank to boldly step up and dance with a fund company was First Union Corp., which purchased Keystone Investments Inc., Boston, for about $183 million last September. First Union's chief executive, Edward E. Crutchfield Jr., has publicly stated his desire to amass $100 billion of assets under management by 2000.

First Union aside, industry experts say there is no indication banks will be willing to pony up the hefty price tags on mutual funds firms.

"They don't understand the business yet," said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I., "and thus can't make the numbers work" to acquire fund companies.

Industry investment bankers agree.

"I have yet to see a major bank step up to buy a real leader in the mutual fund industry," said Robert C. Smith, managing director in Salomon Brothers financial institutions group. "They can't afford it."

It took banks three to four years before they understood the mortgage lending business well enough to build that part of their business, Mr. Bobroff said. But understanding the different culture and finances of the mutual fund business is likely to take them longer.

Experts say banks would be more successful with an asset manager acquisition.

A small regional money manager, particularly a manager for high net worth individuals, is likely to be less expensive and more stable than a retail mutual fund complex, said Peter L. Bain, an industry investment banker and managing partner at Berkshire Capital Corp., New York.

Bankers shied away from fund companies because they feared the stock market would decline and erode the expensive assets. But this market correction didn't happen, again leaving banks out of the loop.

"They don't pay the prices, so they lose the acquisition because they think the market is going to crack," Mr. Bain said. "And then the market doesn't crack, so they lose." Banks actually could have afforded to pay the exorbitant prices because the stock market continued to rise, he said.

But it would be difficult under virtually any circumstances to envision a bank paying the whopping $1.1 billion that Morgan Stanley Group paid for Van Kampen-American Capital Inc., in June. Or the 10 to 11 times pretax earnings that Franklin Resources, a mutual fund company, paid last August for Michael Price's Heine Securities.

Mr. Bain said he does not expect banks to change their thrifty ways this year, making it difficult for them to compete in this acquisition market. However, he identified First Union and Mellon Bank Corp. as two banks that will likely be active on the money management acquisition scene.

Another investment banker said he expects the commercial banks to show more interest this year in mutual fund company deals, but he does not expect them to pay more money.

While Milton Berlinski, a partner at Goldman, Sachs & Co., agrees with others on Wall Street that banks are still not willing to pay the high cost of a fund acquisition, he said banks are likely to do more asset management acquisitions.

Prices for retail fund companies will remain high, he said, and will push commercial banks toward high net worth and institutional money managers.

"There's a higher likelihood of success" with such a deal, because a small local asset manager can be easily integrated into a bank's operations, he said, and an asset manager can be smaller and more manageable than a retail fund company.

Not only could a major mutual fund company be unmanageable, but Salomon's Mr. Smith is skeptical whether a bank could make a fund acquisition work, even if it could afford it.

"Banks' track record is so far questionable," Mr. Smith said. Nothing about commercial banks has changed that would make an acquisition integration smoother, he added. The jury is still out on whether or not Mellon's 1994 acquisition of Dreyfus Co. was a success, he said.

While the wisdom of that deal is still debated in industry circles, the bank would have to dole out significantly more money if the deal was done today.

"What I don't think anybody understands is that two years later, the price (for Dreyfus) would have been 50% higher," said H. Rodgin Cohen, a partner at Sullivan & Cromwell, the New York law firm, in a recent interview.

With banks facing these astronomical costs, Mr. Smith said he does not foresee any major breakthroughs by banks in the money management business this year.

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