Four years after creating a capital markets group, First Union Corp. told investors this week that the unit is on track for $2.2 billion of revenue this year.
And the Charlotte, N.C., company said its overall wholesale business, which also includes its commercial bank, is primed for more growth. Over the last year First Union has bought CoreStates Financial Corp. - which had a large commercial base - and two investment banks.
"We have bridged traditional commercial banking and capital markets to provide one-stop shopping for middle-market customers," said spokesman Jeep Bryant.
Wholesale business provides 50% of earnings for $235 billion-asset First Union.
The company made an in-depth presentation Monday outlining the gains on the wholesale side.
Capital markets revenue has grown from $311 million in all of 1994 to $1.6 billion through Sept. 30 of this year, it said.
Commercial banking, which includes deposit products, lending, and real estate banking, is also making strong gains in cash management and small- business areas, according to First Union.
Small-business is expected to contribute $35 million to earnings this year, with 15% to 20% growth predicted for each of the next three years. Cash management should add $82 million to 1998 earnings and is expected to generate 11% annual bottom-line growth.
The presentation drew high marks from analysts.
George A. Bicher of BT Alex. Brown said First Union's capital markets group should be "one of the leading engines of growth."
First Union is building a business "that reaches beyond the confines of a traditional bank," said a report from Credit Suisse First Boston.
Bradley G. Ball, a Credit Suisse First Boston analyst, said that in addition to providing one-stop shopping for clients in its East Coast region, First Union uses teams of experts to offer products nationally.
Morgan Stanley analyst David B. Hilder said First Union "is among the best in the banking industry at anticipating the need for structural changes in the delivery of financial services and implementing those changes quickly."
