Union Bank of San Francisco is negotiating a deal to make its proprietary mutual funds available to 32 million credit union customers.

The $12.6 billion-asset bank is in discussions with the National Association of Federal Credit Unions, an Arlington, Va.-based trade group, said Greg Knopf, a vice president. Union Bank, a unit of the Bank of Tokyo, manages the Stepstone Funds, with 13 portfolios and $1.5 billion of assets.

In recent months, several banks that manage mutual funds have announced plans to expand sales by marketing the funds through other banks and through brokerage firms. But Union Bank is the first to focus its sales efforts on credit unions.

Steven Joiner, president of Nafcu Services Corp., confirmed that the trade group is considering offering the funds as part of a broad plan to bring financial planning services to members.

Credit union members "have demonstrated they want to buy mutual funds, so why not through us?" Mr. Joiner said.

He noted that many of the trade group's 750 member credit unions already have a strong tie to Union Bank: two institutional mutual funds managed by the bank are popular vehicles for credit unions that need a place to invest short-term funds.

That connection should give the retail Stepstone Funds a smooth entree into credit unions, he added.

"We have no reason in the world not to stay with [Union Bank]. They've been good to us," Mr. Joiner said.

To help carry out the financial planning effort, the trade group also plans to endorse an investment products marketing firm to set up sales pro. grams for its members, Mr. Joiner said.

Financial Network Investment Corp., a mutual fund and annuities marketer based in Torrance, Calif., is believed to be the front-runner.

Mr. Joiner declined to discuss specific candidates. But he said the firm that is selected will be asked to make the Stepstone funds an "important part" of the financial planning program.

For his part, Mr. Knopf said an accord would present "a dynamic opportunity" for Union Bank.

The trade group's members include some of the nation's biggest and most aggressive credit unions. Among them: Navy Federal Credit Union, the industry's leader, with $8.3 billion of assets.

Forging an Alliance

UNION BANK would offer its Stepstone Funds to 32 million credit union customers

NATIONAL ASSOCIATION OF FEDERAL CREDIT UNIONS would promote the funds as part of a broad financial planning program

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