U.S. Bancorp stands to gain a needed chunk of fixed-income assets when it buys neighboring broker-dealer Piper Jaffray Cos.

Minneapolis-based U.S. Bancorp would acquire 32 mutual funds, which includes some $4.7 billion in taxable bonds, as well as $1 billion in municipal securities, according to figures obtained from Piper Jaffray.

Thus the deal, which is largely predicated on expanding the distribution channels for the bank's funds, would also fill a gap for U.S. Bancorp, which is much stronger in money markets and equity-based mutual funds than it is on the fixed-income side.

Fixed-income is a key area, said Geoffrey H. Bobroff, an analyst based in East Greenwich, R.I., who noted that bank fund investors tend to be in "the conservative slice of the investment community."

U.S. Bancorp agreed to buy the Minneapolis broker-dealer and investment banking operation, which includes asset-management arm Piper Capital Management, last month. The deal, valued at $730 million, is set to close during the second quarter.

The Piper deal came just six weeks after the fund families of U.S. Bancorp and First Bank System Inc. were combined. First Bank acquired U.S. Bancorp but took the Portland, Ore., company's name when the deal closed.

U.S. Bancorp's original fund family, the Qualivest Funds, was merged into the First American fund complex, a division of First Bank, increasing the acquiring bank's mutual fund assets by 15%.

That merger resulted in a portfolio of 32 funds, with $19.8 billion of assets. Those funds tilt heavily in favor of money market assets. Roughly 51% of the assets are in money market funds, a third in equities, and the remainder in the fixed-income arena.

The Piper deal will bring just over $1 billion in stock funds into the mix, covering both international and domestic equities, said a Piper spokeswoman. The bank would gain roughly $3.2 billion in money market funds.

In the fixed-income arena Piper has had some regulatory problems stemming from losses on derivatives in 1994, but analysts observed that U.S. Bancorp is likely to benefit from the additional bond assets.

"The Piper funds have been handicapped in recent years through the upset they had with derivative securities," said Burton J. Greenwald, a Philadelphia analyst. But he noted that those losses have since been settled by the company.

"U.S. Bancorp, through the First Bank assets and now through the Piper assets, is certainly becoming a more credible player in the mutual fund marketplace," Mr. Bobroff said.

Mr. Bobroff and Mr. Greenwald said that the Piper Jaffray acquisition would greatly enhance the distribution potential for U.S. Bancorp's proprietary fund family.

The bank would gain 1,235 retail brokers when the deal closes.

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