First Union Corp. on Friday completed its $1.1 billion deal for Everen Capital Corp. and immediately moved to stamp its own brand name on the Chicago broker-dealer and its other securities businesses.
The new entity, First Union Securities Inc., absorbs two section 20 subsidiaries: Everen and Wheat First Union, the Richmond, Va.-based broker-dealer that the Charlotte, N.C., banking company acquired in February 1998. In addition, the company's broker-deal unit, First Union Brokerage Services, will report up to First Union Securities.
By putting all of its capital markets and capital management businesses under one umbrella, First Union hopes to present a unified image to corporations and individuals that use its securities services.
"What we're trying to build is a combination that's 50% bank and 50% securities business," said Donald A. McMullen Jr., executive vice president and head of the bank's capital management group.
The Everen acquisition vaults First Union four places to rank sixth among the nation's retail brokerage firms, with 6,300 brokers in 41 states. First Union now manages $152 billion in brokerage assets for three million customers.
Mr. McMullen said the Everen acquisition and the rebranding are part of a 10-year campaign by First Union's chief executive officer, Edward E. Crutchfield, to build a "strong traditional bank" coupled with a securities business. First Union Securities' capital markets arm will be headed by a team of four managing directors reporting to president-designate G. Kennedy Thompson.
Asked whether First Union would make any future acquisitions, Mr. McMullen said, "This really gives us the mass and scale we wanted."
However, R. Harold Schroeder, an equity analyst with Schroder Securities in New York, said First Union could not rule out future deals if it wants to take on heavyweights like Merrill Lynch & Co.
Banks "are all in a race to gather more brokers to become an asset-gathering business," Mr. Schroeder said. "You gain more brokers sooner through acquisition."
Television and print advertisements will begin appearing this week touting the First Union Securities name, a spokeswoman said.
The ads, which will run on CNN and in publications including The Wall Street Journal, will target both corporate executives and higher-end retail investors, those with $100,000 and upward to invest, she said. The ads will be part of the bank's continuing "Financial Worlds" corporate campaign created by San Francisco agency Publicis & Hal Riney and reportedly costing the bank over $100 million.
"It makes sense to leverage off of the First Union name," said Charles Wendel, president of New York-based Financial Institutions Consulting, a brand consulting firms. The company takes the risk of alienating some of the Everen's existing customer base, "but I think it's a minor risk," he added.
However, Richard Evans, president of Evans & Associates, a consulting firm in Weston, Conn., questioned First Union's use of its corporate name to reach sophisticated investors.
"First Union has brand equity in the banking field," Mr. Evans said. "The issue is whether bank brand equity is transferable to the investment field."