American banks increasingly are turning to their foreign counterparts for help in expanding sales of the mutual funds they manage.

First Union Corp. recently began selling its Evergreen Keystone Funds through Banco Santander's Puerto Rico broker-dealer subsidiary, said Chad Peterson, a spokesman for the North Carolina bank's mutual fund division.

And Bankers Trust New York Corp., which set up a joint venture with Brazil's Bank Itau in 1995, expects to begin selling its retail mutual funds in that country later this year, said Allen Hanson, a company spokesman. It already sells mutual funds through offices in Australia and manages institutional money in Japan.

Observers said the experience of these banks could provide a model for other large banks that are looking overseas for mutual fund sales growth.

"In an ideal world, European banks would look to U.S. banks for distribution, and U.S. banks would look to European banks for distribution," said Tom Cote, a San Francisco consultant.

But trying to crack foreign markets isn't for everybody.

"Distribution outside your own bank system is more difficult by definition, and outside your own country is ever more difficult," said Joy P. Montgomery at Money Marketing Initiatives, Morristown, N.J. Banks already entrenched in foreign markets, like Citicorp and Bankers Trust, are more likely to succeed than others, she said.

Banks that want to compete abroad for mutual fund customers face some formidable competition. Mutual fund giant Fidelity Investments, for instance, has been selling its portfolios overseas since 1968.

Fidelity has $11 billion in retail fund assets offshore, the most of any U.S. fund company, according to Lipper Analytical Services, Summit, N.J. Bankers Trust is the largest offshore player among banks, with $6.5 billion in retail funds.

Bankers Trust has done business in Australia since 1970, Mr. Hanson said, and currently manages $9.5 billion in retail fund assets there. The bank has sold its mutual funds in Australia for the last 15 years.

In addition, Bankers Trust manages about $13 billion in institutional assets in Australia. It also manages $8 billion in institutional assets in Japan, and plans to begin selling retail funds there in the near future. Mr. Hanson said it has not yet been decided which funds will be offered to Japanese investors.

First Union gained access to Japan when it bought Keystone Investments. The acquisition closed late last year. Keystone advises four retail mutual funds for Kokusai Securities Co., a large Japanese securities company. The fund company also manages mutual funds for France's Credit Lyonnais, said Mr. Peterson, the spokesman.

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