After hiring some 20 investment banking professionals from Wall Street, Bank of Boston Corp. has been given the green light to put that talent to work.

The Federal Reserve Board last week approved Bank of Boston's application to set up a section 20 debt underwriting subsidiary. Bank of Boston is the 40th domestic or foreign commercial bank to receive such powers.

"We want to be able to stay with our middle market clients who are also interested in high yield as they progress up the funding and capital market food chain," said Vincent "Val" Mulcahy, the president and chief operating officer for BancBoston Securities Inc., the bank's new underwriting subsidiary.

The unit, which employs some 200 people, will underwrite and trade fixed-income securities-including high yield bonds, Yankee bonds, and municipal revenue bonds-for Bank of Boston's customers. It also houses the bank's loan syndications group and mergers and acquisitions advisory business.

"Corporate debt underwriting is the real essential driving force behind it all," said Mr. Mulcahy.

The bank also received permission to underwrite equities, provided they are part of a debt issue. Bank of Boston currently has no plans to build a full-fledged equity capability, Mr. Mulcahy said.

Managing director Steve A. Shenfeld will lead the high-yield group, which Mr. Mulcahy said should land its first underwriting assignment in the next few weeks.

Mr. Mulcahy conceded that BankBoston is entering a very competitive market, as both domestic and foreign institutions are desperately trying to win mandates to underwrite junk bonds. For that service, banks reap fees equal to 2% to 3% of a transaction.

"There are many banks that are getting into it now, and there are more in the queue right behind us," he said.

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