Chase Manhattan Corp. is capitalizing on synergies among various units to ramp up its mortgage securitization operation.
"We're building a mortgage operation in and of itself," said Ranjit Kripalani, a managing director and head of the mortgage-backed business at Chase Securities. "Our synergy with the banking company franchise is icing on the cake."
Mr. Kripalani noted that Chase not only owns a mortgage bank that originated $33 billion of loans last year but also has a global banking business that could broaden the market for the securitized loans.
For regulatory reasons, the securities unit must maintain some distance from Chase Manhattan Mortgage.
Chase Securities can't get advance notice of loan sales, for example. But "we are very competitive with other investment banks" that bid to securitize and then sell Chase mortgage loans, Mr. Kripalani said.
And in cases where Chase Securities and another investment bank submit the same bid for a Chase mortgage deal, the sister company gets the business. "They get to win the ties," said Luke Hayden, executive vice president of Chase Mortgage.
Aside from operations on the home front, Mr. Kripalani wants to leverage Chase's global presence to boost business. He sees Chase Manhattan's solid swaps business as a door-opener for placing mortgage investments with various money managers.
Working with other Chase units could indeed help the securities operation, but the company must keep fees in line, industry observers said.
The Chase name "could open doors overseas" but whether the unit is able to find new investors "really comes down to price," said Larry E. Swedroe, a principal at Buckingham Asset Management, Clayton, Mo., who was a vice chairman of the parent of Prudential Home Mortgage.
Mr. Kripalani said he recognizes the challenge and has done a lot of hiring to make sure deals remain competitive-and profitable.
Over the past year, he has brought on 40 traders, salespeople, and researchers from 15 investment firms, including heavy hitters Greenwich Capital Markets and Merrill Lynch & Co.
With this year's volume expected to come in around $5 billion, "We may not be the top issuer of mortgage securities," Mr. Kripalani said. "But we want to be among the top 10 in experience and credibility with investors."
