Wells Fargo Preps for Mortgage Securities Rebound

Financial marketsAs the market for residential mortgage-backed securities takes shape in the months to come, Wells Fargo wants to be ready, and it has some clout as the top home mortgage originator.
But it faces tough competition from big bank rivals seeing record fixed-income trading revenue.
Well Fargo has announced expansion of its Residential Mortgage-Backed Securities (RMBS) platform, including naming Mike Buttner to head the RMBS unit, which now provides full advisory, research, structuring and trading services.
The appointment of Buttner, a 19-year veteran of Wells Fargo, and an expansion of the bank’s mortgage-bond desk from 5 to 30 employees, is part of a plan to be fully prepared when the RMBS market is expected to make some degree of a comeback by year’s end.
The market for securities backed by non-government-guaranteed mortgages collapsed with the financial crisis about two years ago.
Buttner will report to Tim Mullins, head of Fixed Income Trading, and Julie Caperton, head of Asset Backed Finance and Securitization, two divisions within the Securities and Investment Group.
“Wells Fargo’s dominance in mortgage origination combined with strong investor demand for all types of residential product made this an obvious area to expand within Wells Fargo Securities,” said Tim Mullins, head of Fixed Income Trading.
Well Fargo is now the top home mortgage originator, but it faces sizable competition from JPMorgan Chase and Bank of America in fixed-income investment services.
In the first quarter 2010, Chase reported record fixed-income markets revenue of $5.5 billion, compared with $4.9 billion in the prior year. Bank of America reported fixed income, currency and commodities revenue of $5.8 billion, primarily driven by sales and trading revenue.
Wells Fargo said it earned trading revenue of $537 million in the first quarter, representing less than 3 percent of total consolidated revenue.  It reported $2.7 billion in trust and investment fees, up 20 percent year over year, reflecting “continued growth in new customers, higher transaction volumes and stronger equity markets.”

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