Intent on becoming a U.S. corporate banking powerhouse, Union Bank of Switzerland for the first time has tapped an American to run its U.S. operations.
Brooklyn-raised Richard C. Capone, a 20-year veteran of the bank, took over as chief operating officer of UBS North America this month, replacing Marcus Rohrbasser.
Mr. Capone, 53, has lofty goals for the bank, including turning it into a top five syndicated lender within the next several years. The bank, which has done business in this country for more than 20 years, has recently ranked in the top 10 or 15; it is now No. 9.
"We want to be a leader in global finance, and North America is critical to that success," said Mr. Capone, who was most recently senior managing director and head of corporate and institutional banking.
Mr. Capone plans to continue building UBS North America's expertise in both commercial and investment banking. He is also focusing efforts on cracking six key industry sectors: financial institutions, life sciences, technology, energy, media and telecommunications, and utilities.
To be sure, UBS North America has a lot going for it. The triple A-rated bank has a strong reputation among top-shelf corporations and is well known for its prowess in real estate and project finance. But observers and competitors question whether that is enough to catapult UBS into the top five here in syndicated lending.
For starters, the current crop of leaders - Chase Manhattan Corp., Citicorp, J.P. Morgan & Co., BankAmerica Corp., and NationsBank Corp. - are not about to relinquish their positions anytime soon. NationsBank, the fifth-largest lender in the first half by volume, had an 8% market share and almost three times the volume of deals as UBS North America, according to Loan Pricing Corp. Chase, meanwhile, had more than nine times UBS' volume.
"There are about 25 institutions that all have the same objectives" as UBS North America, said a loan syndicator from one of the top five. "Guess what? There ain't room for 25 people."
Moreover, the UBS unit has yet to break into the top 20 in leveraged lending here - a sector that accounted for about 15% of the record $253 billion of loans syndicated in the second quarter.
UBS North America could penetrate the top five syndicated lenders in this country by serving only highly rated companies, such as General Motors Corp. and AT&T Corp. But lending to lower-rated companies would offer the opportunity to rake in the highest lending fees.
That is not lost on Mr. Capone, who wants to build UBS' presence in leveraged industries like telecommunications and media. The process should take two or three years, he said.
"When you're growing the business, you have to have patience, the best people, and (an ability to) stay focused," he explained.
UBS has already shown some progress in reaching Mr. Capone's goals. Through the end of the second quarter it had led $17 billion in loans, compared with $18.6 billion in all of last year, according to Loan Pricing Corp.
Also, the bank recently won an $800 million sole-underwriting assignment from Noble Affiliates Inc. The loan will fund the $750 million purchase of Energy Development Corp., a unit of Public Service Enterprise Group Inc., by Noble's Samedan Oil Corp.
Mr. Capone said the assignment was the prototypical deal for UBS because the investment banking contact had won the bank a commercial banking assignment.
One observer called Mr. Capone the quintessential universal banker, combining a strong commercial banking background rooted in providing credit to industrial companies with knowledge and expertise in investment banking. (UBS North America has been operating for years as both a commercial and an investment bank, under a grandfather clause exempting it from the separation of functions otherwise required by the Glass-Steagall Act.)
Mr. Capone "brings all of the very best qualities of relationship management that you would associate with J.P. Morgan," said the observer.
UBS has made impressive strides in some arenas, ranking as the third- largest sponsor of asset-backed commercial paper conduits, with almost $7 billion of programs in 1995.
"That's coming from nowhere three or four years ago," Mr. Capone said.
Banking experts said by promoting Mr. Capone, UBS indicated that it is serious about the American marketplace.
"The positives for the choice of Mr. Capone are that he's an American and he's a relationship guy," said someone familiar with UBS.
One of Mr. Capone's challenges, however, will be to continue bridging the gap between UBS' commercial and investment bankers.
"He not only has to try to build a business, but also fashion a culture," said Dave Robertson, the U.S. senior vice president and general manager of Royal Bank of Canada. "It's not easy, because you have a certain risk parameter in a commercial bank that is not necessarily the same as in an investment bank."
But Mr. Capone said he is unfazed. "In terms of trading and sales to commercial and investment banking, the ability to integrate skills has worked much smoother than it ever has before," he said.
As for continuing to build the business, Mr. Capone recognizes that his goals are high.
"The plans are clearly ambitious - but realistic," he said. "This is a process, not an event."
