Brokerage, Bank Plan an Alliance : Securities: Nationsbank and Dean Witter propose to sell investments at bank branches. The first joint venture of its kind still needs regulatory approval.

NEW YORK —  In the first joint venture between a major U.S. bank and brokerage, Nationsbank and Dean Witter Financial Services Inc. said Monday that they will establish a securities firm to sell mutual funds and other investments in bank branches across the country.

The proposal, which must be approved by regulators, is another step in breaking down the traditional wall between the banking and securities industries. It comes as banks are searching for new ways to develop fee-based services.

“This is a truly unique alliance which is unprecedented in both the securities and banking industries,” said Philip J. Purcell, chairman and chief executive of Dean Witter.

Under the terms of the joint venture, each partner would own 50% of the new Charlotte-based company, to be called Nations Securities. Purcell and Hugh L. McColl Jr., president and chief executive of Charlotte, N.C.-based Nationsbank Corp., would not say how much capital would be contributed to the new firm.

Initially, Nations Securities will have offices in 30 of Nationsbank’s largest branches, but that number is expected to increase as the number of investment officers at the firm grows from 400 in the first quarter of 1993 to 600 by this time next year.

Nationsbank is the nation’s fourth-largest bank holding company in terms of assets, with branches in nine states and the District of Columbia. Dean Witter is the nation’s third-largest securities firm in number of brokers and the eighth largest in terms of capital. While Dean Witter is now a unit of retailing giant Sears, Roebuck & Co., the brokerage company will soon be spun off from Sears.

“Finally, we have a transaction in which synergies will be achieved,” said Michael A. Flanagan, a securities industry analyst for Lipper Analytical Services Inc. in New York. “It seems like a much more viable strategy than putting Dean Witter branches in Sears stores.”

The experiment is certain to be watched closely by other major banks and brokerage firms and, if successful, could lead to similar pacts.

“The management of consumer assets will be the fastest growth and most lucrative segment of the financial services industry for the next 20 years,” Edward Furash of the consulting firm Furash & Co. told Dow Jones news service.

Nations Securities will try to sell its products and services through other banks across the country, principally institutions with assets of between $200 million and $5 billion, the venture’s partners said.

Both companies estimate that the joint venture would break even next year but contribute $50 million to $60 million in profit to each partner by its fifth year of operation. McColl said Nationsbank’s existing securities unit, which will be contributed to the joint venture, now earns $15 million a year.

The partners said they expect the new company to capitalize on several trends. These include the plunge in interest rates on bank certificates of deposits to 20-year lows and the growing sales of mutual funds to bank customers seeking higher returns on their investments.

Banks accounted for 13% of mutual fund sales last year, up from 6% in 1988, and the percentage is expected to climb to 25% by 1995, Purcell said.

Under the proposed transaction, “Nationsbank gets access to our systems and software and technology, and we get access to their customer base,” Purcell said.

Both executives said they have no concerns about Nations Securities “cannibalizing” their existing business. The bank market for investment products and services is different and distinct from the market for full-service securities firms.

Indeed, according to SRI International, the Palo Alto, Calif.-based consulting firm, the median income of people who buy securities through banks is about half the $49,900 annual income of those who use full-service securities firm. The median net worth of a bank’s securities customer is one-fifth the $210,000 of a full-service brokerage firm customer, SRI said.