Chemical Banking Corp. has dismissed two top executives from its retail brokerage subsidiary, apparently to cut costs amid declining sales, sources close to the bank said.
Steven B. Plump, director of sales, and David E. Frankel, director of marketing, were let go from Chemical Investment Services a week or so ago.
Mr. Plump and Mr. Frankel could not be reached for comment, and Chemical declined to discuss the departures, confirming only that the two executives "no longer work for the bank."
Chemical Investment Services has been reinventing itself since scrapping a joint venture with Liberty Financial Cos. last year. The shake-up left observers wondering about the direction of the brokerage.
"I'm a little surprised," said Kenneth Kehrer, a Princeton, N.J.-based consultant. "Plump has a lot of experience."
Mr. Plump, 36, was lured by Chemical two years ago from Chase Manhattan Corp., where he headed an investment program managed by GNA Corp., Seattle.
He was brought in to oversee the sales effort for Chemical's joint venture with Liberty, a Boston-based mutual fund company. He had previously worked for Citibank and Massachusetts Financial Services, a Boston-based mutual fund company,
Although the Chemical-Liberty venture collapsed last June when Chemical decided to form its own retail brokerage, Chemical kept Mr. Plump on board and placed him in charge of the sales effort.
"He was a rising star, and now he's out of a job," said a former banker who knew Mr. Plump and who declined to be named.
"Nobody knows how Chemical works. They had Invest (Financial Corp., another investment marketing firm); they threw them out. They brought in Liberty; then they threw them out. Where is the continuity for the client, for the program?"
But several sources familiar with the bank said that sales of investment products through Chemical's branches have been poor, and that Leonard E. Malkin, a managing director who heads up the unit, has been "under a lot of pressure" to shape it up. Mr. Malkin declined to be interviewed.
Banks in general have had great difficulty selling investment products in the past year, on the heels of a poor year for mutual fund performance.
"Everyone's sales are down," Mr. Kehrer said. "In a sense, Chemical is not alone. There is continuing cost pressure on bank broker-dealers."
Another potential factor contributing to banks' declining sales has been the fierce competition they get from mutual fund companies, particularly companies that sell mutual funds directly to the investing public.
"A lot of banks are sorting through to see how to structure their brokerage business to better compete with a large universe of no-load funds," said Les Dinkin, a managing principal of NBW Consulting Group, Westport, Conn.