Northern Trust Corp. plans to open a Detroit office to serve master trust customers that it hopes to lure from First Chicago NBD Corp., which is getting out of the business.
The move by Chicago-based Northern Trust shows how important it considers the potential $250 billion in master trust and institutional custody assets First Chicago will shed by June 30.
First Chicago last month said it plans to abandon its master trust operation, a specialized back-room processing business dominated by about half a dozen large players, including Chase Manhattan Corp. and Bank of New York Co.
Rather than selling the business, First Chicago has agreed to refer business to Northern Trust and receive undisclosed compensation for any customers it sends Northern's way.
Initially, Northern Trust will open a Detroit office with seven people, but that number is likely to increase, said Sheila A. Penrose, executive vice president of corporate and institutional services at Northern Trust.
"We expect it to grow," Ms. Penrose said. "This is a client servicing center. As business continues to expand, we'll expand our office."
Northern has said it doesn't expect to lure all of First Chicago's business, but opening an additional office is necessary because of potential competition for the funds from other banks.
First Chicago has a number of large corporate, insurance, labor, and public pension funds that Northern Trust would like to serve, Ms. Penrose said.
Within 30 days, announcements should be made about where the office will be located and who will staff it, she said. Northern Trust is talking to some of First Chicago's sales people. In all, 300 people will be "affected" at First Chicago, but a spokesman said not all will lose their jobs.
Northern Trust has $575 billion of corporate and institutional assets under custody, ranking it among the 10 largest master trust and institutional custody providers in the United States.
Because of the large investments in technology needed to be competitive, Ms. Penrose said she believes other banks will drop out of the business,
