Chase, Seeking Size, Shakes Up Asset Management

Chase Manhattan Corp., apparently unsatisfied with its stature in the investments field, is carrying out a sweeping reorganization of its asset management and private banking group.

Arjun K. Mathrani, who assumed control of the group less than a year ago, is resigning, and the businesses are being split into three distinct units, each with its own management.

Observers said Chase wants to boost assets under management and compete more effectively with nonbank rivals around the world.

"Asset management thrives on scale," said George Bicher, an analyst at BT Alex. Brown. "Chase seems to be at a crossroads and would like to get much bigger."

Chase currently has $136 billion of assets under management for institutional and private clients and $28 billion in its Vista mutual fund family for retail investors. By contrast, Fidelity Investments and Merrill Lynch & Co. each have nearly $1 trillion under management.

Mr. Mathrani, senior managing director of the group, is planning to leave the company at the end of the year, and his responsibilities have already been divided among three Chase executives.

Chief investment officer Mark Richardson will lead all asset management activities for the bank and report to Chase president Thomas Labrecque. Sarah Jones, who now oversees global mutual funds, including the Vista group, will continue in her present job but report to Mr. Labrecque.

Meanwhile, Maria Elena Lagomasino will head up private banking and report to vice chairman William Harrison.

According to an internal memorandum distributed last week, the move reflects the findings of an internal task force set up last year to grapple with issues about the group's growth. A Chase spokesman said only that the changes would result in a more efficient use of resources.

Asset management and private banking produced just 5% of Chase's $15.9 billion of total revenues in 1996. For leading nonbank rivals, the share is closer to 10%.

Analysts said asset-gathering efforts may have been slowed by the long process of integrating Chase's operations with those of Chemical Banking Corp. The two banking companies merged in 1996.

In organizing after the merger, the hope was to realize economies of scale by putting all asset management functions under one group. But that approach apparently has not worked out, analysts said.

"Now they are almost to where they were three years ago," said Lawrence Cohn, an analyst at Ryan, Beck & Co. "They've realigned along customer segments rather than functional segments. In the end, it'll come down to how well they execute."

Mr. Mathrani, 53, had been in charge of the group since February, when he replaced James W. Zeigon, who became head of Chase's cash management and corporate trust business. Mr. Mathrani, who could not be reached for comment, has spent his entire career at Chase.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER