First Security Corp. has received approval from the Federal Reserve to establish an investment banking and securities subsidiary, First Security Capital Markets Inc.

Salt Lake City-based First Security applied to the Fed in November to establish a so-called section 20 subsidiary and got approval last week. Section 20s can underwrite and deal in certain municipal revenue bonds, mortgage-related securities, commercial paper, and asset-backed securities, known collectively as Tier 1 powers.

Bank executives said they expect the subsidiary to begin operation in the first quarter. Soon after, they said, the bank will consider applying for corporate debt and equity underwriting powers, known as Tier 2 authority. David Wilson is president and chief executive officer of the new subsidiary.

In March, the Fed relaxed or eliminated many of the firewalls separating section 20 subsidiaries from their commercial bank affiliates, prompting a flurry of applications from midsize banking companies. With $16.4 billion of assets, First Security is the 45th bank holding company to establish a section 20 unit.

Separately, SunTrust Banks Inc. said Friday it had completed the acquisition of Equitable Securities Corp. and formed SunTrust Equitable Securities Corp. by merging its investment banking subsidiary, SunTrust Capital Markets, into Equitable Securities.

Atlanta-based SunTrust announced in September its deal for Nashville- based Equitable, an investment bank, securities brokerage, and investment advisory firm. The new subsidiary has received Tier 2 authority from the Fed.

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