First Union Corp. is putting together a trading operation for distressed, discounted, and par loans.
The Charlotte-based bank hired Thomas Finke, formerly a vice president at Bear, Stearns & Co., to manage par loan trading. Robert Haley, formerly a vice president at NationsBank Corp., will oversee discounted trading, and Julie Bouhuys, a member of First Union's leveraged finance team, will lead the distressed-loan trading business.
Loan trading desks help banks manage their portfolios, give them access to market information, and present opportunities for profits, bankers said.
"As banks take lead positions on transactions, they want to understand how and why things trade in the secondary market as they do," said Patricia Loret de Mola, a senior vice president and assistant general manager at Mitsubishi Trust. "It's good to have a better understanding of all the facets of the leveraged-lending business."
Mitsubishi Trust started a loan trading operation in the middle of January. Ms. Loret de Mola said that the bank has been able to sell down its positions in some debt and has taken advantage of several brokerage opportunities.
First Union led over $12.2 billion in syndicated loans in 1996, placing it 16th for the year.
"When you've got a bank as big as First Union, they have a certain number of loans that are a problem that they are in the midst of working out," said Robert Marcus, managing director at SunTrust Capital Markets.
"If they are going to mark them down to market and sell them anyway, it makes sense to do that in a centralized fashion through a dedicated sales or trading effort," he said.