Daiwa Bank and Sumitomo Trust Banking & Co.'s decision to jointly provide administrative services for corporate pension and other trust funds was motivated by their desire to share the burden of information technology investment -- a catch phrase in the financial industry these days.

Information technology is seen as the key area of investment for many of the nation's financial institutions. This is especially true in the pension business, where companies that entrust their pension funds are demanding a more diverse and higher level of services from pension managers, according to bank officials.

Daiwa Bank and Sumitomo Trust, both headquartered in Osaka, told a Tokyo news conference Tuesday that they have agreed to set up a new trust bank that will specialize in the administration of pension trusts, as well as investment trusts and "tokkin" specified money trusts.

Heavy computer infrastructure will be required to provide high-level administrative services, the officials said, adding that the joint venture will allow them to halve the costs of building the system.

Apart from administration, however, the two banks will keep separate other aspects of pension-related services, such as the actual investment of assets and reporting of investment performance to customers, the officials said.

The proposed trust bank will be the nation's No. 1 trust funds administrator, with combined entrusted assets of 47.6 trillion yen.

The venture, to be set up by October 2000, is also poised to be a provider of "master trusts," which are expected to be liberalized soon.

Master trusts are currently prohibited. The nation's trust banking law has long banned corporate pension funds from entrusting administration of their assets to a single administrator.

But the Health and Welfare Ministry is leaning toward lifting the ban as early as April as a result of calls from corporate pension funds wanting to grasp at a single glance the overall performance of the assets they have entrusted.

Tuesday's announcement follows a similar move reported last week between Nippon Life Insurance Co. and Mitsubishi Trust & Banking Co., and could trigger more tieups.

Bank officials also said they will invite participation in the planned venture from other financial institutions, though no specific discussion is in progress.

They declined to comment on whether Mitsui Trust & Banking Co., which is scheduled to merge with Chuo Trust and Banking Co., will join the alliance. The tieup between Sumitomo Trust and Mitsui Trust has come into the picture following a recent merger announcement by Sakura Bank and Sumitomo Bank.