Keycorp and Boatmen's Bancshares were among the companies "actively interested" in buying Provident Investment Counsel, which was sold to United Asset Management for $475 million earlier this week, sources told the American Banker.

The sources were unable to say whether the banks went so far as to conduct duediligence reviews or submit bids. But their interest is yet another example of banks seeking out opportunities to expand their money management businesses through acquisitions.

The deal with UAM also shows that banks face stiff competition from nonbanks.

Deals that have been announced this year by banks include PNC Bank Corp.'s acquisition of BlackRock Financial Management LP for $240 million in cash and notes and Comerica Inc.'s acquisition of an undisclosed minority stake in Munder Capital Management of Birmingham, Mich.

Boston-based United Asset, which now has $120 billion of assets under management, would not release details of its purchase of Provident. And Keycorp and Boatmen's would not comment on their interest in the company.

A Wall Street investment banker said the base price was $350 million -- $50 million higher than reported in some published accounts. He said earnouts, or revenue sharing, would add $125 million, for a total price tag of $475 million.

The high price, illustrates why the rash of bank deals that was expected in the wake of Mellon Bank Corp.'s purchase of Dreyfus Corp. has been slow to materialize.

To be sure, banks have announced about 15 acquisitions of money managers since Mellon announced plans last year to buy Dreyfus.

But Mr. Duffy said most of the deals occurred early this year, and that since then price has become the major hurdle.

Banks often trade at half the price-to-earnings multiple of asset managers. Banks' low stock prices pose problems when they want to buy other banks, and even bigger problems when they target the pricier asset managers.

An acquiring asset manager like United Asset has a significant advantage over banks trying to enter this arena, said Robert Baer, an investment banker with Bear, Stearns & Co.

Banks "simply aren't willing to pay a management team a large amount of money," said one Wall Street investment banker, frustrated with banks' hesitancy.

"Banks want to get into this arena, but the issue of retaining management and keeping management incented is critical to any of these transactions," added John Duffy, director of corporate finance at Keefe, Bruyette & Woods Inc.

"The banks as a group are having a lot of difficulty convincing themselves that they can manage an operation where so much is at stake."

And price isn't the only issue. One investment banker said Colonial Group Inc. was not even actively shopped to banks because it was feared that other banks would cease to distribute its funds if a competitor owned Colonial.

Last month Liberty Financial Cos., a mutual fund company, bought Colonial for $310 million.

United Asset is seen as an attractive partner, because it structures its deals so acquirees enjoy autonomy.

And while acquiring an asset manager is only one of several possibilities for a bank seeking fee businesses, it is the only M&A concern for an acquiring asset manager.

What's more, banks culturally have a tough time stomaching the large payouts to asset managers, an investment banker said. In Provident's case, the company had five owners, which could mean payouts of up to $95 million.

"There is also a general concern about the greater deterioration in the operating characteristic of asset managers, including fund flows, investment performance, expense growth, than you have had [reflected] in pricing," said Hans Morris, a financial institutions managing director with Smith Barney Inc.

"Prices still reflect the 1993 environment," he concluded. "But if you look at just about anybody, operating performance is down."

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