The new head of Bank One Corp.'s capital markets group says he is hoping for a bonanza in sales of debt and equity products to the company's 40,000 commercial customers.
F. Gerald Byrne, who was named chairman of Banc One Capital Markets after it was combined with First Chicago Capital Markets last week, said that as many as 10,000 customers - one-fourth of the bank's commercial customer base - could use such products. Fewer than 1% use them now, he noted.
"The power of this franchise is penetrating existing customers," Mr. Byrne said. He is particularly interested in serving companies with annual sales of $50 million to $1.5 billion.
The 52-year-old executive was formerly chairman of First Chicago Capital Markets. Banc One of Columbus, Ohio, bought First Chicago NBD Corp. in October, creating $260 billion-asset Bank One.
David R. Meuse, the former head of Banc One's capital markets, announced last week that he and several other executives were leaving to start Stonehenge Investors Inc. The new firm is expected to manage some mezzanine finance funds for Bank One.
Bank One's new capital markets group does not "intend to be a global player taking market share away from Merrill Lynch or Goldman Sachs," Mr. Byrne said.
The unit offers loan syndications, investment-grade and high-yield securities underwriting, private placements, and asset securitizations.
Bank One has about 650 sales, trading, and operations employees in capital markets. And 200 commercial bankers are licensed to sell investment banking products. First Chicago's capital markets group was about three times the size of Banc One's, Mr. Byrne said.
The combined unit "certainly has the horsepower to make a big difference," said James Schutz, an analyst at ABN Amro Inc. "A question a lot of people ask about that area is, 'Is it profitable?'"
Mr. Schutz said Bank One will go head-to-head with some big players, including Citigroup Inc., Chase Manhattan Corp., and First Union Corp. "Some capital markets do come with a fair degree of risk," the analyst added.
Mr. Byrne acknowledged that the competition is tough, and he said keeping rival investment companies from stealing Bank One customers is a priority. "We intend to be the corporate financial solutions provider of choice for customers of Bank One," he said.
One of Mr. Byrne's goals is to increase the number of regional offices from nine to 12 by yearend, and to as many as 19 later. The company has regional offices in Chicago, Columbus, Dallas, Detroit, Indianapolis, New Orleans, New York, Oklahoma City, and Phoenix.
The capital markets unit targets companies in areas where Bank One is also an active lender: automotive, energy, utilities, transportation, retailing, and insurance.
Mr. Byrne said he hopes to beef up the company's municipal finance business. Bank One wants to be among the top three municipal underwriters in every state in which it does business. It currently holds that distinction only in Illinois, Indiana, and Kentucky.
"This is a hugely untapped market," Mr. Byrne said. He added that Bank One chief executive officer John McCoy "wants to be the No. 1 bank in every state we do business. If we're going to be the No. 1 bank, we darn better be among the top three for municipal finance."
