Last week Salomon Smith Barney created a new principal finance group, to be headed by former U.S. term ABS co-heads Bill Grady and George Graham, moving top bankers Bob Malin and Ted Yarborough up to take over the entire domestic term effort.

The new group will operate in tandem with the asset-backed term business, working with the ABS trading desk. Malin and Yarborough will now report to the co-heads of Global Securitized Markets, Mark Tsesarsky and Jeff Perlowitz, as will Grady and Graham.

Principal finance will be responsible for the purchase of receivables from clients or via whole loan sales and for either holding the collateral or re-packaging it into securities issued off an in-house shelf. This move follows the purchase of underperforming credit card receivables from Providian Financial, which coincides with a $1.4 billion securitization being led by Salomon and joint lead manager Goldman Sachs.

"In response to a confluence of market, economic and regulatory developments, we believe now is an opportune time to place greater emphasis on our principal finance efforts within Global Securitized Markets," Tsesarsky and Perlowitz said in an internal memorandum that circulated last Thursday.

Also, Paul Donlin, former head of U.S. conduit operations, was named head of the global conduit business for Salomon. Jim Murray, global conduit administrator, will expand his role to include liability management, regulatory and accounting issues as well as maintaining rating agency relationships.

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