In a major shift in its approach to retail banking, Chase Manhattan Corp. has reorganized its regional banking sector along customer rather than product lines.

The reorganization, announced internally on Thursday, for the first time puts a single executive in charge of consumer banking relationships in the highly competitive New York market. He is Joel Epstein, a senior vice president who formerly ran Chase's branch system in Manhattan.

As the new "segment executive" in charge of consumers, Mr. Epstein will coordinate all businesses focusing on wealthy individuals and mass market customers.

|Voice of the Customer'

As such, he will cut across several organizational areas - such as private banking, direct response marketing (credit cards), and consumer financial services - that have long dominated Chase's power hierarchy.

"We're introducing into our management structure the voice of the customer," said Donald Boudreau, who remains executive vice president in charge of Chase's regional banking group.

In addition to Mr. Epstein's consumer segment, Chase has desipated a middle-market segment and a small-business segment. The middle-market segment will be headed by Gregory Rotella, a senior vice president in charge of business banking in the New York City area, and the small-business segment by Richard Schrumpf, a senior vice president formerly in charge of diversified industries in the North American corporate finance sector.

Chase's community development activities for low-income and moderate-income customers will continue to be run by Mark Willis, who also has been given the segment executive title.

Power to Chart Products

Each executive will be responsible for budgets, business planning, marketing strategy, product focus, and pricing, and will report directly to Mr. Boudreau.

Although segment executives will not have line responsibility for many employees, each will have a call on senior product executives, with power to chart new products and launch new strategies.

The product units "will be requested to change as may be required" to carry out the strategies of the segment executives, said Mr. Boudreau.

The segment executives also will assume the profit-and-loss responsibilities that were traditionally held by the branch executives who oversee Chase's seven regions in New York State and Connecticut.

The regional managers will be responsible for executing segmentation strategies and distributing products aimed at particular customer groups.

A |Source of Influence'

The newly promoted executives will wield strong power over Chase's legion of sales and marketing teams, Mr. Boudreau indicated.

"The executives will be an important source of influence with regard to training and rewarding our people," he said.

As part of the restructuring, Mr. Epstein's responsibilities for the Manhattan branches were handed to Norman Buchan, a senior vice president who oversaw the retail outlets in the New York City boroughs of Brooklyn, Queens, and Staten Island. Susan Webb, a vice president, was promoted to Mr. Buchan's former post.

Chase Manhattan Bank, the company's flagship unit, is the third largest bank in metropolitan New York in customer relations, behind Citibank and Chemical Bank. Earlier this year, Chemical rejiggered its retail banking strategy but took a decidedly different tack by organizing according to product lines.

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