A new study shows that a majority of the nation's biggest banks and thrifts now sell investment products, but bankers and observers are still somewhat hesitant to call them substantial earners.

The study for the Bank Securities Association shows that an overwhelming 94% of the top 100 banking companies and 60% of the largest thrifts participate in the investment product business.

Driven by the desire of retail investors to participate in the equity bull market, banks and thrifts have sought to offer a one-stop financial services model to depository customers.

In recent years, several large depository institutions such as KeyCorp of Cleveland, PNC Bank Corp. of Pittsburgh, Wachovia Corp. of Winston-Salem, N.C., and U.S. Bancorp of Minneapolis, have bought brokerage firms to help expand their investment product businesses. Others are trying hard to build the business internally.

A similar study conducted in 1996 by Kenneth Kehrer Associates, a Princeton, N.J., consulting firm, showed that depository institutions were already offering brokerage services in an effort to retain retail assets. Back then, 92% of the top 100 depository institutions offered investment products.

However, the "brokerage part of the business is still a relatively small piece of the pie (at banks)," according to Michael Kim, a principal with Tillinghast-Towers Perrin, a New York financial services consulting firm.

Michael Harkins, first vice president of brokerage at People's Bank Connecticut in Bridgeport, said the challenge for bank-run brokerages is to accelerate their current growth.

"Philosophically and strategically, the brokerage business is here to stay. But I think we all have a way to go in terms of what percentage of banks' overall revenues are being generated by the brokerage arm," he said.

Profitability depends on factors like the length of time a depository institution has been in the business, and how integrated it is with businesses such as trust and private banking, observers said. It also requires a strong commitment from top management.

"If they see it as a profit center, it becomes one because the management pushes for it," said Peter R. Bauer, the chief executive of the brokerage arm at Compass Bancshares in Birmingham, Ala.

"If they see it just merely as a defensive measure, they don't necessarily build the business they way they should," he said.

Thomas K. Whitford, the chief executive of PNC's wealth management unit, which includes Hilliard-Lyons Inc., the retail brokerage it bought last year, said brokerage will continue to be a bigger source of income and revenue at banks. But only if "you're committed and willing to make the investment and can create the right culture," he added.

Mr. Whitford said he expects investment sales to represent 55% of PNC Advisors' revenue within four years, compared with 35% today. PNC Advisors accounts for 12% to 13% of the banking company's overall revenue.

Offering investment products is not just about contributing "enormous profitability to the bottom line," said Richard V. Downen, the president of Bank of America's brokerage unit. It's also about giving the customers what they want, he said. "If we don't do a good job of providing them with the investment business, they'll go somewhere else for it."

The study by Diversified Services Group, a consulting firm in Wayne, Pa., found that 79 of the top 100 banking companies have their own broker-dealer , while 15 offer securities through third-party brokers. Based on a universe of 81 of the top 100 thrifts, 22 had their own broker-dealer, while 25 sold investment products through third parties, and two others offered them on an "unregistered" basis, the study found.

The survey also looked at the types of services offered by various brokerages, the availability of investment products through the branch network, and the number of sales representatives who have series 6 and series 7 licenses. It gauged responses from 137 depository institutions, though not all of them responded to every question.

Robert F. Grieb, who authored the study for the Bank Securities Association, said it is particularly significant that 56% of depository institutions have both discount and full-service components.

In the early 1980s, banks started offering discount brokerage, but most were not very successful, and by the mid 1980s, many had abandoned those operations and moved to full-service. In the 1990s the "pendulum started swinging back" to having both, though typically the units targeted different customers, Mr. Grieb said.

That, however, is beginning to change as depository institutions recognize "that the same customer may want to use multiple approaches," he said.

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