Bear Stearns placed first in the 2004 manager activity rankings for combined agency and non-agency RMBS, according to final Thomson Financial league tables, a departure from recent history where UBS reigned as the undisputed top MBS underwriter.
Bear Stearns took the top spot with $90 billion sold and a 12.3% market share; significantly outdistancing second placer UBS, which only sold $79.4 billion in proceeds, good for a 10.9% market share.
The factor catapulting Bear Stearns to the top was its involvement in the mortgage origination process through Irving, Texas -based unit EMC Mortgage Corp. Two years ago, Bear Stearns tapped EMC's expertise in troubled mortgages, specifically, scratch and dent loans, as a source of new securitization product. Through EMC, Bear reached out to small bank and broker mortgage sellers.
"Bear Stearns is the most diversified mortgage operation on the Street and that helps us in a changing rates environment," said Tom Marano, head of MBS and ABS at Bear Stearns. "We decided to focus on the origination of mortgage loans, especially subprime paper, in 2004, and that increased our volumes. As part of this effort, we built up staff at EMC Mortgage, our Texas mortgage originator and servicer, to go after collateral directly. For 2005, we believe our strength in the secondary market will position us well even as rates continue to rise."
However, despite the firm's current success, its totals compared to 2003 were down, which is in line with a general industry trend of falling volumes. In contrast, during the same period the previous year, Bear Stearns sold $100.8 billion, although it had a lower market share of 11%. UBS, on the other hand, topped the charts in 2003 with $104.1 billion in proceeds and an 11.4% market share.
Another notable move is Goldman Sachs plunging to eighth in 2004 from the third spot the year before. Selling less than half of its volume in 2003, Goldman had $46.2 billion in proceeds this year, garnering a 6.3% market share. In direct contrast, the firm sold $100.2 billion in 2003 and had a 10.9% market share.
Third place Lehman Brothers had $73 billion in proceeds for a 10% market share, inching up a notch from 2003, although selling much less in comparison. For the 2003 rankings, Lehman sold $95.3 billion and garnered a 10.4% market share. Banc of America Securities was fourth place for 2004, with $70.2 in proceeds billion in proceeds, equivalent to a 9.6% market share. BofA, last year's sixth finisher, sold $75.2 billion, garnering an 8.2% market share.
Credit Suisse First Boston maintained its 2003 standing at fifth place with $52.7 billion in proceeds in 2004, equivalent to 7.2% market share, narrowly edging out Morgan Stanley. In 2003, the firm sold significantly more at $82.4 billion and had a larger market share at 9.0%.
Morgan Stanley and Citigroup Global Markets are sixth and seventh place, respectively, for the 2004 year-end leagues. Morgan Stanley sold $51.5 billion for a 7.1% market share while Citigroup sold $50.8 billion for a 7.0% market share. In 2003, the two firms swapped places as Morgan Stanley had $70.1 billion good for a 8% market share while Citigroup was slightly ahead with $70.8 billion in proceeds and 7.7% market share.
Sharing 6.3% of the market with Goldman is RBS Greenwich Capital, which maintained ninth place from 2003. Narrowly missing eighth place, RBS Greenwich sold $45.9 billion in 2004, selling less than the $52 billion sold in 2003 although it had less of a market share then at 5.7%. Deutsche Bank Securities follows with a distant $32.6 billion and 4.5% market share, rounding out the 2004 top 10. The firm did not make it in last year. Ranking thirteenth, Deutsche sold $22.1 billion and had 2.4% market share.
For the 2004 fourth quarter rankings, Bear Stearns was also on top, selling $19.1 billion, equivalent to a 12.4% market share. Bear maintained its lead from 3Q04 when it sold a whopping $27.8 billion. BofA was second in 4Q04 with $16.9 billion in proceeds and an 11% market share. Third place Lehman Brothers sold $14.9 billion for a 9.7% market share.
As expected, final industry totals for 2004 are down from the previous year, reaching $730.5 billion, a 20% decline from the previous year. The 2003 industry total was $915.9 billion. This diminishing annual volume is attributed mainly to declining refinancing activity.
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