National City Corp.'s plan to purchase a full-service brokerage could be the start of a trend among banks seeking to boost mutual fund sales, industry experts say.

National City, which announced its plan in December, "is clearly one of the first to do it," said Kenneth Hoffman, chairman of the Optima Group, Darien, Conn. "It's something other banks are still considering."

Currently, banks rely on sales agreements with outside brokerages to expand the reach of fund sales. But these arrangements offer no guarantee that the funds will get anything more than shelf space, analysts say.

A mutual fund executive at a large East Coast bank agreed that buying a brokerage makes sense to expand investment product reach. But, he added, these firms "are a bit pricey right now."

Regional brokerages can go for more than $10 million, industry experts say.

National City is not disclosing how much it plans to pay for Raffensperger, Hughes & Co., the largest brokerage firm in Indiana. But the Cleveland banking company clearly believes its investment will pay off.

The 200-employee operation "will help us expand our product plans and expertise," said David W. Dunning, managing director of National City Investments, the banking company's brokerage.

The deal, which is expected to close in August, will give National City 60 brokers in eight Raffensperger sales offices in Ohio, Indiana, and Michigan.

The Raffensperger representatives and offices will operate under the banner of Natcity Investments, the $31 billion-asset banking company's section 20 underwriting unit. This arrangement will allow National City to expand its underwriting activities through an outside affiliate, executives said.

The former Raffensperger offices will "absolutely" add the NCC funds to the approved list of fund companies they represent, said Raffensperger's chairman, Herbert Martens, who will continue to oversee the brokerage's operation.

The arrangement is promising, but only if representatives avoid pushing the NCC Funds too hard, said Mr. Hoffman, the analyst.

"Regional brokerages pride themselves on the fact that they are independent of any fund company," he said.

Raffensperger's existing customer base would likely be turned off unless they feel they are still receiving objective advice, Mr. Hoffman said.

Still, analysts applaud the purchase, saying it is the best way for any bank to expand its brokerage business.

Banks have only a limited number of customers who will buy funds from them, Mr. Hoffman said. "Ultimately, expanding and acquiring external distribution is necessary to build their efforts."

The purchase is not expected to affect the structure of National City's in-house brokerage. Those 100 representatives will continue covering 650 branches in Ohio, Kentucky, and Indiana as employees of National City Investments.

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