Bank of New York purchased the global custody, master trust, securities lending and securities clearing operations of Bank of America, giving BONY more than $2 trillion in custody assets. Joseph Velli, executive vice president with BONY, said the acquisition puts his bank and State Street Bank on equal footing.
He wouldn't disclose terms of the deal.
Mr. Velli declined to comment on whether BONY is interested in the custody operations of J.P. Morgan, which are rumored to be for sale.
Smith, Graham & Co. reached an agreement to purchase Cisneros Asset Management. Both Houston firms are minority-owned fixed-income managers.
Gerald Smith, chairman and chief executive of Smith, Graham, wouldn't disclose the purchase price, but sources have estimated the deal at $2 million, a diminished price reflecting the absence of founder Henry Cisneros. Mr. Cisneros is secretary of Housing and Urban Development.
Cisneros was said to be looking at deals because Criterion Investment Management - which owns 15% of Cisneros - is being sold to Nicholas-Applegate Management. Criterion and Cisneros share office space and maintain subadvisory relationships. Gilbert Garcia, president of Cisneros, said "everything is a factor" in the decision to sell, but that combining the two firms made good business sense.
The deal is expected to close in June, pending shareholder approval, and the two firms will consolidate offices, said Mr. Smith.
A National Association of Pension Funds committee last week proposed the creation of a compulsory private U.K. national pension scheme that would generate (pounds) 5 billion to (pounds) 10 billion ($8 billion to $16 billion) a year in new savings.
Britons not covered by employer-sponsored schemes would be required to participate. Employees and employers each would contribute 5% of salary initially, with possible increases to a combined 20%. The state would make contributions for the unemployed and the sick. Together with other revisions of the state pension system, the aim would be to provide 50% of career average earnings at retirement.
Rep. Jim Saxton, R-N.J., vice chairman of the Joint Economic Committee of Congress, once again plans to introduce an amendment to ERISA that would ban private pension funds from investing in economically targeted investments, or those that aim at meeting such social policies as creating jobs or housing for poorer Americans.
Mr. Saxton plans to introduce the legislation as a stand-alone bill within the next two weeks, said Joseph L. Engelhard, Mr. Saxton's counsel on the Joint Economic Committee.
The bill, The Pension Plan Protection Act, would make it a breach of fiduciary duty to consider social policies or any other secondary benefits in making investments. Instead, pension officials only may consider maximizing investment returns. The bill also would prevent government agencies from creating a list of socially acceptable investments or offering guarantees or subsidies for such investments. Pension plans that invest in ETIs could lose their tax benefits. Mr. Saxton introduced his previous ETI bill last fall just before Congress adjourned. No action was taken.
The $414 million Chicago Park Employees' Annuity & Benefit Fund hired Pacific Investment Management and Lincoln Capital Management to run $50 million each in active fixed income, said Joseph M. Fratto, executive director.
Ennis Knupp assisted in the search. Other finalists were Brinson Partners, Standish, Ayer & Wood and Kemper Asset Management.
Investment Counsel Co. is expected to complete a transaction separating its institutional money management and wrap fee business on Monday or Tuesday.
CEO Grant McMurry and Managing Directors Richard Rundell and Frank Guerriero will remain in charge of the institutional portion, which has $420 million under management for approximately 90 clients.
The wrap-fee business, which has $220 million in assets and approximately 800 clients, will be sold to CIO Fred Shockley, operations head David Brock and Brian Davis, head of systems for the firm. They will retain the Investment Counsel name and registration.
The group has applied for SEC registration under the name ICC Capital Management. After the spinoff, the firm expects to develop equity business, including the addition of a chief equity manager, said Mr. Guerriero. Two candidates have already been identified and one will be chosen shortly, he added.
Lloyds Bank PLC last week agreed to acquire NatWest Group's global custody business for (pounds) 16.9 million ($27.3 million), doubling Lloyds' presence in the U.K. market.
The acquisition will raise Lloyds Bank Securities Services' custody assets to (pounds) 110 billion from (pounds) 53 billion. Lloyds recently has combined its unit trust and global custody businesses and made a substantial investment in new computer systems.
Anthem Capital Management agreed in principle to buy all of Prime Capital Management, a deal that would create a firm with $5.7 billion in assets under management. Both firms are in Indianapolis.
Terms were not disclosed.
Initially, Prime will operate separately from Anthem. How much, if any, of the operations will be merged will be determined in the future, said Leif E. Nulsen, president and chief executive of Anthem.
Anthem is a wholly owned subsidiary of The Associated Group, Indianapolis.
Prime is owned by its president and chief executive, Leland E. Tanner. Prime's largest client is the Indiana Public Employees' Retirement Fund, Indianapolis.
Mr. Tanner has a five-year employment contract with Anthem, but said part of why he sold the firm was to prepare for his eventual succession.
Creditanstalt Bank is reassessing the functions of its U.S. money management subsidiary, Creditanstalt Global Asset Management, following the departures of its two top marketers. L. Charles Bartz, director of marketing, is leaving the firm to join Washington Square Advisors as senior vice president of marketing. Earlier this year, Managing Director Stephen D. Niss left.
Creditanstalt Managing Director Geoffrey Hoget said officials of the firm will have discussions with the two money managers it owns a stake in, Steinberg Asset Management and GH Asset Management, to decide what to do. He would not elaborate on what steps the firm might take.
The $3.5 billion Employee Retirement System of Rhode Island, Providence, chose Pacific Corporate Advisors as a consultant to help invest $175 million in alternative investments.
The $175 million will come from short-term cash, and from rebalancing.
The state pension fund will be "looking at a range of investment options, some through managers, some could be direct investments," said Steve Klamkin, spokesman.
IBM Corp., Armonk, N.Y., will convert its $7.6 billion tax deferred savings plan to daily account valuation and processing from its current weekly valuation basis, according to Ray Kanner, manager-employee investment program.
Speaking at a GIC conference sponsored by the Institute for International Research, Mr. Kanner also said officials are reviewing the $3.5 billion stable value fund. They may consider diversifying the synthetic contract mix to include wrapping a fixed-income portfolio based on one of the major fixed-income indexes. More than half of IBM's stable value fund is invested in either buy-and-hold or actively managed synthetic GICs, he said, with traditional insurance company GICs representing about 34% of the fund's assets.
The $335 million Vassar College endowment hired John A. Levin to run up to $30 million in a large-cap value portfolio, according to Jay Yoder, investment analyst.
The assets will come from a reduction in existing domestic equity accounts.
Cambridge Associates assisted.
Dutch pension funds lost an average 3.3% in 1994, according to The WM Co. Negative returns from bonds, at -3.8%, and equities, at -5.4%, dragged down performance.
While new cash flow declined last year from 1993, greater than average allocations were made to Dutch bonds and, to a lesser extent, to international equities and bonds. Private loan portfolios continued to be reduced.
On average, Dutch pension funds had 57% in fixed income, 29% in equities and the rest in property in 1994. But the range was enormous: some of the 136 pension funds surveyed were nearly 100% invested in fixed income while others had nearly 50% of assets in stocks.
A lawsuit in which Darien Capital Management sought $3.1 million in unpaid investment management fees from the Pennsylvania Public School Employes' Retirement System was dismissed by the Pennsylvania Board of Claims.
The Board of Claims said it was filed beyond the six-month statute of limitations.
Darien filed an appeal April 21.
The dispute between Darien and the fund centered in part on which of two performance fee arrangements was valid. Darien managed an options overwriting assignment from 1988 to 1992.
Smith International Inc. last week reached a $4 million out-of-court settlement with the Labor Department over its selection of the now-defunct Executive Life Insurance as group annuity provider. The settlement will be distributed to about 220 participants and dependents of the company's pension plan, shut down in 1986.
The Labor Department sued in 1992, charging Executive Life was picked without checking the insurer's financial stability, creditworthiness or ability to pay claims.
