National Bank of Washington customers soon will be able to buy and sell stocks and bonds directly through NBW, as the bank becomes the first in the District to offer discount brokerage services.
An expanding number of banks across the country are providing securities services to their customers to meet increased competition from other financial service companies.
Chase Manhattan Corp. said yesterday that it is negotiating to buy Rose & Co. of Chicago, the nation's fourth-largest discount broker, and BankAmerica Corp. recently bought the nation's largest discount broker, Charles Schwab & Co., for $53 million.
Although NBW customers will be able to buy and sell stocks and bonds directly through the bank, the actual accounts will be maintained by Bradford Broker Settlement Inc., a New York discount brokerage firm.
Discount brokers buy and sell securities for clients, generally at a commission rate well below those charged at full-line brokerage houses. But discount brokers do not offer many of the services, such as research, that full-line firms provide and do not underwrite stock and bond offerings by corporations.
Luther H. Hodges Jr., chairman of National Bank of Washington, said the service will be offered first to a select group of the bank's customers beginning Feb. 15, but within a few months will be available to nearly all the bank's customers.
National Bank of Washington, with assets of about $1.1 billion, is the third-biggest bank in the District.
Officials of both Chase and Rose confirmed that talks were going on, but would give no other details. A Chase source said, however, that the bank hopes to complete a purchase agreement soon, and one report said that an agreement could come by the middle of next week, in time for a Chase board meeting scheduled for Wednesday.
"I think we're fairly close to a deal," the Chase source said.
A Chase Manhattan takeover of Rose would have to be approved by the Federal Reserve Board.
The Chase source said the bank, the nation's third-largest, chose Rose because "it's a quality discount securities broker with a proven track record."
Rose was founded in 1972, three years before the abolition of fixed-commission rates made discount brokering possible. It now executes about 2,000 trades daily. Although Rose's six-branch system is not nearly as large as Schwab's, which has more than 50 offices, the Chase source said the basic framework of the brokerage is more important than the number of offices it has.
"You really don't need the brick and mortar. How often do people visit their stockbrokers?" he said. "There are a lot of different ways to grow this business."
Chase could offer the discount brokerage service, for instance, through its bank branches in New York, through its consumer-finance offices in Florida and the Southwest, or to its millions of Visa credit card customers