Vincent Mulcahy, president and chief operating officer of BancBoston Securities Inc., is not a farmer, but he is talking like one.

He is intent on increasing the harvest of financing business from the corporate customers of BancBoston Securities' owner, BankBoston Corp.

"That's the challenge for any commercial bank moving into the investment banking field. The way to increase that harvest is to stay with the clients as they go up the financing food chain," he said.

"Fundamentally, the strategy at BSI is very simple," Mr. Mulcahy said. "It's relationship-driven. Our clients are traditionally high-yield, non- investment-grade customers, and they need to go beyond bank borrowing to high-yield debt. And to have high-yield debt, you have to have a section 20."

The genteel Mr. Mulcahy was born in Ireland and educated in England. He has retained his accent despite spending 15 years in New York, most recently as treasurer of Chase Securities Inc.

He moved from Wall Street to Boston's Federal Street in September of last year, two months before the Federal Reserve granted Tier 2 authorization to BancBoston Securities.

A little over a year later, BancBoston Securities and BankBoston now offer almost a complete range of capital markets products, including public debt securities, loan syndications, cross-border finance, asset securitization, and mergers and acquisitions advice.

Still missing, however, are equities.

BancBoston is currently testing the infrastructure systems it would need to operate an equities group, said Mr. Mulcahy.

"I'm very confident that in the next month or so we'll be in the position to say, 'There you are, we're ready to start,'" he said.

But the question of how it will use those systems remains unanswered.

"We have looked at a lot of acquisition opportunities," said Bradford F. Warner, executive vice president and manager of global capital markets for BankBoston.

"Recently, we've probably leaned a little bit more toward the build or buy-and-build approach. That's something that continues to be under active consideration," he said.

"If within the next year to 18 months we hadn't done anything, I would be quite surprised," he added.

Observers said BankBoston's strategy of building up its section 20 to round out its capital markets product offerings isn't unique, but it is sound.

"It's a necessity because the world of plain vanilla corporate banking is not a very profitable one," said Sally Pope Davis, banking analyst with Goldman, Sachs & Co.

"Companies like Chase trying to build out a one-stop-shopping approach have forced more banks to put more ammunition in the arsenal," she added.

Ms. Davis predicted that BankBoston is likely to be successful, relative to its superregional peers, in competing for capital markets business. "The heart and soul of the culture of BankBoston still, to an extent, comes out of the corporate bank. That is their culture and they know how to deliver a sophisticated set of services to a sophisticated set of customers," she said.

Early results from capital markets and emerging markets activity have also pleased analysts.

BankBoston reported a record high return on equity for the third quarter of 21%, up from 17% for the same period last year.

"Much of the strength in the third quarter was specifically related to businesses in which management has been investing, such as capital markets and Latin America," noted PaineWebber Securities analyst Ruchi Madan in a report on third-quarter earnings.

Indeed, the high-yield securities group, started only this year and headed by managing director Steven A. Shenfeld, has completed seven successful offerings to date, and will have led or co-led 20 issues by yearend, group executives predicted.

"We're hitting our expected numbers this year, and I would say the future's pretty bright," said Mr. Shenfeld, who expects to add between 10 and 15 staffers next year to the 35 he has now.

Loan syndications operations, housed within the section 20 and headed by managing director Mary Etta Schneider, have had a record year so far.

Syndication and agent fees totaled $22 million for the third quarter, up from $14 million for the same period last year, according to PaineWebber's Ms. Madan.

BankBoston's rank on the crucial agent-only highly-leveraged league tables also improved, shooting up to fourth place in the third quarter from 19th in the same period last year, according to Loan Pricing Corp.

That places the firm ahead of competitors such as Citicorp and J.P. Morgan for the first time.

The rise in rankings "is an example of the power the combination of our loan underwriting and high-yield business is giving us," said Ms. Schneider.

Her group is currently expanding its administrative agency and research functions, and it now includes 50 people.

Emerging markets sales, trading, and research, headed by managing director Ignacio E. Sosa, has been busy leveraging off of BankBoston's historical strength in Latin America, especially in Argentina and Brazil where it has been a major player for over 80 years.

So far this year, BancBoston has underwritten $2.4 billion in Latin American debt and is ranked 14th among all firms underwriting U.S. dollar- denominated debt in Latin America, according to Securities Data Co. The total volume of emerging market debt underwritten so far this year is $3.7 billion, according to Mr. Sosa.

Mr. Sosa said he expects BSI to become one of the top five underwriters of Latin American debt.

The group now has 53 people but will be hiring at least 10 more next year, said Mr. Sosa.

Fixed-income securities sales and trading was formerly housed in BankBoston Capital Markets but is now situated in BSI, said Denise Delaney, managing director and head of that group.

The move into the section 20 "allows the public finance people, as well as the traders, to deal in both the general obligation bonds in the bank as well as the revenue bonds in the section 20," said Ms. Delaney.

The elimination this year of the regulatory firewall prohibiting dual employees of a bank and its section 20 affiliate have been a boon to the fixed-income group at BSI, said Ms. Delaney.

"Previously, it would have been very difficult to have two sets of people-those who can only do revenue bonds because they're in the section 20, and then those who can only do general obligation bonds because they're in the bank," she said.

"It doesn't sound like much, but the dual employee capability has made a huge difference and it has made tremendous savings in how you can run a section 20," said Mr. Mulcahy.

Asset securitization, private finance, real estate capital markets, and strategic advisory services fall under the authority of John K. Giannuzzi, managing director and group head of corporate finance at BSI.

In conjunction with the development or acquisition of equities capabilities, strategic advisory services will also be built up, said BankBoston's Mr. Warner.

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