Salomon Smith Barney acquired a powerful asset for its commercial mortgage-backed securities roster last week, as CMBS veteran Joseph Franzetti, formerly of Duff & Phelps Credit Rating Co., climbed on board to head up Salomon's commercial conduit loan project.
"We hired Joe in an effort to bolster our staff and expand our market share," said David Tibbals, managing director of Salomon Smith Barney's mortgage finance group. "Joe is a seasoned veteran in the market and he will truly add value to our department."
According to another senior official at Salomon, Franzetti will be in charge of the origination and underwriting of fixed-rate conduit loans. Franzetti could not be reached for comment by press time.
"With the Citibank-Salomon merger, Citibank's conduit group merged with ours, so with those entities combined, we have a much larger group to be in charge of," said the Salomon source. "We needed somebody with Joe's background to come in and spearhead it."
Salomon has an active conduit program like most other banks, said Tibbals, and Franzetti will handle the pooling together of commercial mortgage loans.
This new position seems to be a logical next step for Franzetti, who has spent the last six years as an executive vice president in Duff & Phelps' commercial mortgage real estate department, where he rated CMBS deals. Before working at Duff, Franzetti worked for 10 years at Standard & Poor's.
In his new capacity at Salomon, Franzetti will be moving to the other side of the equation, originating the deals instead of assigning them ratings.
According to sources, it is a relatively common occurrence to have a rating agency veteran jump to an investment bank. One source noted that a similar move happened recently for Ron Wexler, who switched to PaineWebber after several years at Fitch IBCA.
"It is good to know the evaluation process for loans," Tibbals said, "since it is critical to how you structure commercial mortgage securities. There is no doubt that Joe will add value to the process from the origination side because of his strong background, and we hope to raise our profile as well."
Franzetti's hire is expected to jump-start Salomon's business, even though the bank hasn't been doing too badly up to now: last year's combined Citibank/Salomon commercial mortgage origination was approximately $3.7 billion.
"But we hope to make inroads into something like the First Union or Chase kind of names, since we are a commercial bank also," said a source from Salomon. "Already, we know that competitors are not happy with it, because they know that it will make us a bigger factor in the market."
According to Jon Teall, vice president for corporate communications at Duff & Phelps, Andrew Jones and Irene Lundblum will be taking over Franzetti's duties at the company.
"We wish him the best," Teall said. "He was given a wonderful opportunity there."