Keycorp Mortgage Unit Gets New President To Lead an Overhaul

Keycorp has quietly hired a new mortgage chief as part of a broader strategy to shore up consumer lending.

The Cleveland banking company last week named Denis St. Marie president of Key Mortgage Services, which manages $9 billion of residential loans.

He replaces Craig C. Brooks, named president of Key Bank USA, Keycorp's new consumer finance subsidiary - of which the mortgage group is a part.

Mr. St. Marie comes to Keycorp from Banc One Corp., where he oversaw secondary marketing. As his first task, he plans to see the mortgage group through a restructuring that will consolidate origination systems and employ telemarketers to reduce the reliance on higher-paid loan officers.

In an interview at his Cleveland office, Key Bank USA chairman A. Jay Meyerson said the executive shifts were only the beginning.

Key Bank USA will "allow us to get at the vast, vast consumer finance franchise embedded in Key," Mr. Meyerson said. "We want to transition from a bank to a series of high-value lines of business."

Through Key Bank USA, Keycorp will get into the potentially high-margin business of making mortgage loans to customers with spotty credit histories. The company is currently looking for an executive to oversee the new unit for borrowers with B and C credit, Mr. Meyerson said.

Key Bank USA also expects to complete by next month the consolidation of credit card operations so that one unit issues all Visa and Master cards. Until now, each of the company's 13 banks had issued its own cards, an increasingly expensive arrangement.

Keycorp has been trying to cut costs and wring the most from its extensive franchise for the past two years, since its merger with Society National Corp. created a banking giant stretching across the upper United States.

With Key Bank USA, the company is stepping in the right direction by corralling products and creating cross-selling opportunities, analysts said.

Placing marketing, pricing, funding, and systems for certain products in one place is bound to reduce costs, said James H. Weber, a bank analyst with A.G. Edwards & Sons Inc., New York.

Key Bank USA will also allow Keycorp to "coordinate customer activities," Mr. Weber said. "Once you've identified a customer, it's not nearly as expensive to sell them supplemental products and services."

Mr. Meyerson said mortgages - with all the information gathered on applications - will make an ideal springboard for cross-marketing other Key Bank USA products, such as auto loans, credit cards, and even student loans.

The bank would also like to be originating more jumbo mortgages to complement its growing private banking business, he said.

Right now, Key Mortgage Services, which sold its servicing earlier this year, makes about $2 billion of originations a year, Mr. Meyerson said.

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