Chase Brokerage Shifts From Private Banking To Investment Group

Chase Manhattan Bank has taken its discount brokerage out of its private bank and put it into its mainstream investments unit.

Relocating Brown & Co. to Chase Investment Services Group should help the deep-discounter's revenues and profits grow 20% a year, said Gregory A. Rotella, Chase Investment's president.

Formed in June, Chase Investment Services caters to retail, small- business, and middle-market customers.

"There are a lot of cross-referral opportunities between" the discount brokerage business "and those who do business with Chase Investment Services Group," Mr. Rotella said.

The decision to move Boston-based Brown-a deep-discount brokerage bought by Chemical Banking Corp. in 1984-came from Chase's asset management task force, headed by Thomas Labrecque, president and chief executive.

The shift, which took effect this summer, came as several banks take a closer look at the discount brokerage business. Just last month, Mellon Bank Corp. announced an agreement to acquire a Los Angeles discount brokerage with a large on-line trading business.

And a slew of large banking companies, including Fleet Financial Group and Banc One Corp., are said to be among the serious bidders for discounter Quick & Reilly Corp.

But for all their interest in the business, banks have yet to figure out where discount brokerage fits in their organizations, observers said.

"Banks have organized discount brokerage operations in a variety of places for the last 15 years," said Diane Glossman, a bank analyst at Salomon Brothers Inc.

One reason for the confusion is that banks often bought going concerns and only considered where they should go as an afterthought, said Kenneth Kehrer, a brokerage consultant in Princeton, N.J.

Chase's decision to move its discount brokerage into the same unit as the rest of its securities businesses should help it better serve all investment customers rather than only those catered to by a private banker, Mr. Kehrer said.

"I tend to prefer customer-focused strategies," said Mr. Kehrer, "that are organized according to customer groups so decisions about products and sales are made by the person closest to the customer."

Chase appears to be moving in that direction, he added.

Indeed, Chase's early plans for its investment services group included Brown & Co., Mr. Rotella said. But moving the unit out of the private client group-where it had been since 1984-took a couple of months, he said.

"All financial consultants were part of Chase Investment Services Group, so Brown has been dealing with the same customers," Mr. Rotella said. "The only distinction is its deep discount."

Deep-discounters discount their fees even more than the average discount broker. While some discounters charge more than $100 per trade, some deep- discounters charge as little as $17.

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