Despite an intensive cost-cutting effort, First Union Corp. continues to aggressively expand its capital markets capabilities.

It has just opened an office in Baltimore, and its first two hires there are senior bankers from Alex. Brown. Chris Holter and Chris Bartlett joined the Charlotte, N.C., banking company last week.

Observers said they expect First Union to announce new hires from Alex. Brown and other investment banks in the coming weeks to staff the Baltimore office, which takes up the sixth floor of an office building on St. Paul Street in the financial district.

First Union has been rapidly building its capital markets group by making selected acquisitions and by wooing teams from rival banking companies. "They have made no secret of their desire to grow" their capital markets unit, said Katrina Blecher, an analyst at Brown Brothers Harriman & Co.

Last year First Union bought Richmond-based Wheat First Butcher Singer Inc., now known as Wheat First Union. In April, First Union agreed to buy Chicago-based Everen Capital Corp. That deal is slated to close in the third quarter.

The $223 billion-asset banking company has particularly targeted teams from BT Alex. Brown, the investment banking operations of the former Bankers Trust Corp., which was acquired by Deutsche Bank AG this month.

Mr. Holter joins as co-head of equity trading for Wheat First Union, sharing the slot with George Jennison, a longtime Wheat First executive who will continue to be based in Richmond.

Mr. Holter was co-head of Alex. Brown's over-the-counter trading operations.

Mr. Bartlett joins Wheat First as part of its Richmond-based Nasdaq trading team. He was a senior over-the-counter trader at Alex. Brown.

A spokeswoman for Deutsche Banc Alex. Brown, the new name for BT Alex. Brown, said the company continues to have "a deep bench" in its OTC operations in Baltimore.

First Union said this year that it would expand its investment banking and capital markets units, even though it is seeking $400 million in cost savings from a restructuring announced in March.

That restructuring, which included a $380 million charge and the elimination of 5,850 jobs throughout First Union, was designed to make up for revenue shortfalls from the acquisition of CoreStates Financial Corp. last year.

In May, First Union issued its third profit warning of the year, telling analysts it would fall 14% short of its profit goal this year, because of the CoreStates deal, disappointing revenues from its acquisition of Money Store, and expenses from its pending acquisition of Everen Capital.

With the addition of the Baltimore office, First Union's capital markets group has a presence in four cities. Chicago would also be added after the banking company bought Everen.

Equity research, trading, and sales will continue to be based at Wheat First in Richmond, a spokeswoman said. Other sites include Charlotte and New York.

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