Legg Mason to move ahead with savings and loan plan

Regulators approve brokerage's proposal to offer trust services

Financial services

May 22, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Legg Mason Inc. received approval yesterday from a federal regulator to operate a savings and loan, which will allow it to offer trust services to customers nationwide.

The Baltimore-based brokerage and money management firm manages $60 billion in its private client division, and the savings and loan will be able to offer those clients trust products, said Timothy Scheve, executive vice president in charge of administration.

Before the decision, Legg Mason was prohibited from selling trust products to clients in states that would not accept a Maryland licensed trust company.

"Our view is the growth potential is unlimited," Scheve said. "We think it is a great opportunity for us. We think it better helps us serve our clients."

The application, which was submitted a year ago, was approved by the Office of Thrift Supervision in Washington, which is a division of the U.S. Treasury Department that regulates the savings and loan industry.

Scheve said the company will convert Legg Mason Trust Co., which manages about $300 million in assets, to Legg Mason Trust Bank. The thrift will be based in Baltimore and accounts will be serviced here, he said.

Legg Mason Trust Bank will not operate as a typical bank with branches and tellers, Scheve said. Under the OTS application, it is called a "special purpose savings institution" that can only market trust products.

The trust services that Legg Mason will offer include strategies to protect money from inheritance taxes, as well as ways to give charitably. The thrift will offer trust and custodial services to corporations, Scheve said.

If Legg Mason wants to expand the product line and offer banking products, it must receive OTS approval, said William Fulwider, a spokesman for the agency.

Legg Mason isn't the only brokerage house that has received approval for a savings and loan charter. St. Louis-based A.G. Edwards was given approval about a year ago.

"What it represents is a backdoor way into the deposit-taking business," said Bert Ely, a financial institutions consultant in Alexandria, Va. "I think some [brokerages] are looking at this from the standpoint that they have to cover the bases."

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