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April 1, 2000

Banking on Equities

By Peter Chapman

First Union Corporation, which has $253 million in assets, 70,000 employees, and runs First Union National Bank, aims to make half its revenues from the securities business.

Based on the financial results for the first nine months of last year, it is moving closer to that goal. First Union Securities accounted for about $4 billion of the corporation's $10 billion in total revenues.

The revenues come from two units: investment banking in capital markets and asset management in capital management.

Investment Banking Origins

The investment banking business started in 1993 with derivative sales and trading. By 1994, First Union had built out its debt product capabilities with loan syndications, private placements, high-yield debt, high-grade debt and asset securitizations.

The equity push came in 1997 after First Union received equity underwriting authority from the Federal Reserve in May. In August, the bank announced the purchase of Richmond's Wheat First, establishing itself overnight among the top twenty equity underwriters.

To augment a growing money management business, it bought Chicago's Everen Securities last April. The deal extended its brokerage reach west of the Mississippi giving First Union a combined retail sales force of 6,300 Series 6 and Series 7 registered reps.

The additional cold-callers' should help it gather up more assets. First Union now manages $162 billion for a largely retail clientele.

First Union's more recent moves include nabbing about 30 traders and salespeople last summer from BT Alex. Brown. That happened just as Deutsche Bank officially completed its acquisition of the firm.

These pros, who now account for about half of First Union's equity traders, will participate in the official launch this month of a revamped capital markets operation.