Chicago Bank Buys Mortgage Securities Unit of Brokerage

Article excerpt

NEW YORK -- Expanding its reach toward middle-market companies, the Exchange National Bank of Chicago announced on Wednesday that it has agreed to acquire the mortgage-backed securities unit of Butcher & Singer, a Philadelphia-based investment banking firm.

The 35-person division serves as a wholesale trading operation, providing products for retail security brokers nationwide Based in Hallandale, Fla., the division's trading volume exceeded $4 billion in 1984, the company said.

Exchange officials said they thought theirs was the first major bank to acquire a wholesale trader in mortgage-backed and zero-coupon securities, "both of which are among the fastest growing financial instruments of this decade," said Exchange chairman Ira J. Kaufman.

Trading indeed exploded for Butcher's division soon after its began in 1980, with $100 million in volume. Led by Gary Peters, hired in 1979 by Butcher to start the division, Butcher began marketing mortgage securities to other broker-dealers. "It's an educational process -- we really get into the nuts and bolts of working with the dealers on developing their own marketing and sales programs," Mr. Peters said.

Butcher then buys large lots of the securities on the open market, breaking them into smaller pieces that can be sold by its broker clients. The division also began doing the same thing with zero-coupon Treasury securities and certificates of deposit for thrifts and banks -- including Exchange. …