Two banks in the custody business announced new clients last week.
Mellon Bank Corp., Pittsburgh, said it has been chosen as custodian for the $600 million consolidated portfolio of RLI Corp. a Peoria, Ill.-based insurer.
Last month, RLI transferred its dollar-denominated portfolio to Mellon Trust, the investment management, trust, and custody unit of Mellon Bank, said James J. Flannery, Mellon's national sales manager for institutional asset services.
Meanwhile, Brown Brothers Harriman & Co., the New York-based investment bank, said it will take over at the end of August as custodian for the $760 million international fund assets of Nicholas-Applegate Capital Management, San Diego.
Nicholas-Applegate had used both Chase Manhattan Corp. and Bank of Bermuda as custodians for the assets in 27 international and offshore funds, a company spokesman said.
The Bank of Bermuda relationship was inherited last year when Nicholas- Applegate bought Credit Lyonnais International Asset Management Asia, the fund company spokesman said.
Nicholas-Applegate had been planning to transfer its portfolio to Morgan Stanley, Dean Witter & Co., when Morgan Stanley announced it was selling its global custody business to Chase, said Kristen F. Giarrusso, a Brown Brothers partner. "So they would have ended up back with Chase," said Ms. Giarrusso.
Chase's pending deal would create openings for banks in the custody business, and Brown Brothers is talking to a number of institutions that had assets under care at Morgan Stanley, Ms. Giarrusso said.
Mellon's Mr. Flannery also said the deal could be a boon for bank departments such as his. Though some institutions will sit tight, others may "test the waters of the marketplace," as they will have to convert assets anyway, he said.
However, he said, "The only time we get to bid on business with these companies is when they decide to shop."
The Nicholas-Applegate spokesman said the company chose Brown Brothers for its greater "flexibility, proven track record, and personalized service."
Mellon's Mr. Flannery said RLI previously divided its portfolio among three custodians-Banc One Corp., Northern Trust Corp., and Charles Schwab & Co.
RLI did not comment for this story.
Brown Brothers has $550 billion of global assets under custody, and Mellon is custodian for $1.7 trillion of assets.