WASHINGTON -- The Federal Reserve Board said it approved SunTrust Banks Inc.'s application to engage in securities activities through a subsidiary.

The central bank will allow SunTrust Capital Markets Inc. of Atlanta to underwrite and deal in investment-quality municipal bonds, mortgage- and consumer-receivable-related securities, and commercial paper. It will also allow the subsidiary to advise investors, arrange commercial real estate equity financing, and provide brokerage services.

The Fed ruled that two directors from the subsidiary can sit on the board of the affiliated banks provided the directors do not become bank officers, or conduct day-to-day bank activities.

SunTrust, a bank-holding company controlling $40.9 billion of assets, operates in Alabama, Florida, Georgia, and Tennessee.

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