The Chase-JP Morgan deal will create an investment-management giant with $720 billion in assets under management, the companies said. Fifty-two per cent of those assets are invested in stocks, 25 per cent in bonds and 23 per cent in cash or other asset classes. Slightly more than a third of the assets come from overseas.

With much of that money belonging to large corporations and well-heeled individuals, most of it is not invested in mutual-fund form. The mutual-fund arms of the banks have about a combined $80 billion under management, with only $22 billion of that in stock and bond mutual funds at the end of the second quarter and the rest primarily in money-market funds, according to Financial Research Corp. in Boston. American Century has $117 billion in assets under management, mostly in stock funds. (The banks included 45 per cent of those American Century assets in their total asset figure.) In a conference call on Wednesday, officials of JP Morgan and Chase indicated that wealth management would be a large part of the combined company's business.

The two asset-management units and the minority stake in American Century represent "a very important synergy," said Mr Ramon de Oliveira, a JP Morgan executive who has been chosen to run the banks' institutional-asset management and wealth-management businesses. When asked what the status of the American Century stake would be in the combined company, he said, "It's business as usual."

American Century's contribution to JP Morgan's efforts in serving the retirement-plan market, in particular, "has worked exceedingly well," said Mr Douglas A. Warner III, JP Morgan's chairman and chief executive. "We've created great opportunities in defined-contribution [business]. I see every reason that that will continue."

JP Morgan bought the minority stake in American Century in January 1998, mainly for the Kansas City, Mo., firm's expertise in defined-contribution retirement plans including the popular 401(k) plans. Based on typical valuations paid for asset-management companies these days, its American Century stake would be valued at about $1.75 billion.

Chase officials declined to elaborate on the comments from Messrs. Warner and de Oliveira of JP Morgan. If the combined JP Morgan Chase changes its mind about American Century, it has the right, beginning Jan. 15, 2001, to sell some of its stake in American Century back to the Kansas City company, or, if the fund firm doesn't want it, to the public.

American Century is majority-owned by its chairman, Mr James Stowers Jr., and his family. JP Morgan Chase could also increase its stake; JP Morgan's original deal with American Century allows JP Morgan or its successor firm to increase its economic interest in American Century to 50 per cent by January 2001. American Century officials declined to comment on how the banking-company combination will affect their business. But Mr William Lyons, the firm's president, noted that Chase already has a relationship with American Century as custodian for the firm's mutual funds.

Chase has realigned its own stock-fund operation in recent months and faces a considerable task figuring out how Morgan's fund-management unit would fit together with its own.

While JP Morgan and Chase may eventually consolidate some of their fund operations, at first most of the management teams will likely remain separate, said Mr Henry McVey, analyst with Morgan Stanley Dean Witter. Analysts said American Century isn't likely to be integrated, although some opportunities may arise to sell American Century products to Chase's deep list of corporate clients.

(THE WALL STREET JOURNAL)