Chase Manhattan Corp. said Monday it has created an internal business support group as part of a broad effort to economize in finance, marketing, and administrative activities.

In announcing the new unit, Chase Business Services, and in an internal memo last week, the company stressed cost-cutting objectives and said staff cuts are likely.

The memo was not specific, but outsiders speculated reductions could amount to 3,200 positions, or 5% of the work force.

The memo to employees, signed by chairman and chief executive officer Walter V. Shipley and president Thomas Labrecque, said the reorganization would help redirect and focus the New York bank's spending. They want to "change the work habits of Chase and not just the number of workers."

"Chase has tremendous growth opportunities, limited only by constraints on our ability to invest in them," the top officers said. "We need to take a hard look at where we are using our current resources inefficiently to see where we can free up capital."

Analysts interpreted the move as an attempt to ensure continuing profit growth at the $366 billion-asset banking company now that most of the benefits from the 1996 merger with Chemical Banking Corp. have been realized.

"This is more subtle than traditional merger cost savings," said George Salem, an analyst at Gerard Klauer Mattison. "This might keep things going a bit."

Some of the money that is freed up may be used to make acquisitions that would build fee-generating businesses, analysts said. Mr. Shipley and Mr. Labrecque said they are taking personal charge of "a pragmatic focus on instilling, throughout the bank, 'Chase Values' and the types of cross-unit behavior that are necessary to succeed."

As part of the cost-cutting regime, they said Chase would also institute a "moratorium" on the hiring of outside management consultants, reduce its event sponsorships, and eliminate subscriptions for certain periodicals for its employees. The bank estimated these measures would save $70 million a year.

The Chase Business Services group was assigned "transaction-intensive activities" that are best managed centrally at costs competitive with what could be bought from outside providers.

The bank named Elizabeth E. Flynn executive vice president of Chase Business Services, reporting to Marc J. Shapiro, vice chairman in charge of finance and risk management. Ms. Flynn, 37, also becomes a member of the bank's policy council.

She was previously senior vice president in charge of integrating the bank's national consumer finance services unit, reporting to vice chairman Donald L. Boudreau. She joined the bank in 1982.

Analysts described her as "impressive" and "a fast riser."

Observers said the new unit would essentially act as an internal consultant and marketing entity, consolidating advertising and promotional activities, payroll functions, and systems personnel that were previously decentralized among business units.

"They are, in effect, creating a utility in the back office that can serve the whole bank," said Charles Wendel, president of New York-based Financial Institutions Consulting. "The task is to break down some of the silos."

Chase has had what analysts call a "quiet restructuring" under way since last fall. It began to take formal shape in December with the creation of an inner circle of executives reporting to the chairman and president.

Last August, Mr. Shapiro was promoted to vice chairman from his former post as head of Chase's Texas subsidiary. His responsibility was to reduce costs and eliminate inefficiencies.

Observers said Mr. Shapiro's "obsession" with improving the bank's price-earnings ratio would likely lead to further restructurings.

"The major objective has been to make the organization more lean," said Bradley Ball, an analyst at Credit Suisse First Boston. "That fits well with their emphasis on enhancing shareholder value."

By attacking redundancies, the biggest U.S. bank is also transforming its traditional business-line structure, consultants said.

The bank said its wholesale bank, national consumer, and Chase Technology Solutions units will be reviewing their organizations in the next 60 days "to develop more efficiencies."

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