First Union Corp. has gotten the go-ahead to underwrite and deal in equities.
The Federal Reserve Board on Monday granted First Union Capital Markets, the bank's section 20 subsidiary, permission to activate the equity powers it received in 1995.
The Charlotte, N.C., banking company joins about 20 others authorized to underwrite and deal in stocks.
Louis A. "Jerry" Schmitt, a managing director in First Union's capital markets group, said the bank plans to hire 60 equity sales, trading, and research professionals during the next two years.
"We're going to build it a step at a time, piece by piece," said Mr. Schmitt.
First Union plans initially to use its high-yield bond group to underwrite equity warrants attached to junk bonds. It will also underwrite preferred stock issues.
While First Union gained corporate bond and equity underwriting powers two years ago, it had to undergo an examination of its infrastructure and systems before it could put the stock powers to use. This year, it asked the Fed to conduct that exam.
Recent loosening of the rules that restrict commercial banks from selling securities have nudged a number of banks to establish or expand their section 20 units.
"It's a natural," Mr. Schmitt said of the equities business. "It gets you working with companies at their most important level because their equity is very important to them. Just like with mergers and acquisitions, it's an important part of the overall capital markets."
First Union's industry and geographic focus is not going to change with the addition of equities capabilities, he added. "We're going to focus on our customers."
The majority of First Union's customers are in the East and fall into the health care, energy, utilities, cable communications, and financial institutions industries.