PNC Mutual Funds Chief Quits Bank in Turf Dispute

The head of PNC Bank Corp.'s mutual fund operations resigned recently over a dispute concerning the overhaul of the company's investment units, sources said.

George Bernard Jr., who had been a senior vice president of PNC's brokerage subsidiary and manager of its proprietary PNC Funds, quit in August, the banking company confirmed.

A spokesman said the split was amicable and that Mr. Bernard's position had not been filled.

But a former PNC executive said a rift had developed between Mr. Bernard and the bank's management after the unveiling of a plan to move the $24 billion-asset mutual fund operation from PNC's brokerage unit to its trust and asset management unit.

The shift, which a source said was initiated shortly after Mr. Bernard's departure, reversed a strategy adopted three years ago, when the mutual fund turf was yanked from PNC's trust division and handed over to Mr. Bernard, who was hired in 1992 to help drive PNC into long-term mutual funds. At that time, the funds were entirely concentrated in money markets, which are still a big part of the picture.

The source, who asked not to be identified, said PNC's latest move would have stripped Mr. Bernard of much of his authority.

Reached by telephone at his home in Pittsburgh, Mr. Bernard would not comment on developments at the bank but said he left the company on friendly terms.

He added that he was looking at new opportunities and would decide in November on his next move.

There have been a number of high-level defections at bank mutual fund divisions this year, including most recently Richard A. Davies, who left First Chicago Investment Management Co. this month for Alliance Capital Management, New York.

"What's driving this is the rash of bank consolidations and cost cutting that's affecting the industry," said one representative at a New York-based executive search firm. "A lot of my clients are afraid they'll be pushed out once the knife comes down on their department."

Carole S. Berger, a banking analyst with Salomon Brothers in New York, said she wasn't privy to details at PNC but that she isn't surprised to hear the bank was rejiggering its asset management business. "The whole institution has been under a significant restructuring because of earnings problems," she said.

Ms. Berger added that money management is a big line of business for PNC and it is "one that they are clearly targeting for growth, but that doesn't mean that it couldn't stand restructuring."

Thomas K. Whitford, senior vice president and director of product management, has assumed Mr. Bernard's duties at the company, PNC's spokesman said.

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