First Union Corp.'s plan to open a West Coast capital markets office spotlights the seriousness of the North Carolina bank's efforts to provide alternative financing to corporate customers.
The bank said the new office will be managed by John Dahl, 41, formerly a managing director at First Chicago Corp. Mr. Dahl will report to Mark Mahoney, a managing director who heads First Union's investment banking division in Charlotte.
"Our corporate finance office on the West Coast will augment our coverage of accounts west of the Rockies," said Mr. Mahoney, who joined First Union from Citicorp three and a half years ago.
"We already have an established clientele on the West Coast," Mr. Mahoney added. "So this is really not a departure at all. It's a further expansion of our efforts in terms of penetrating the investment banking side of those clients' businesses."
Mr. Mahoney said the Los Angeles office would open on Sept. 15 with three employees and gradually expand to six or eight. He said First Union was not afraid to compete directly with the large California banks.
"By having local representation, you really increase your odds of penetrating the business," he said.
The hiring of Mr. Dahl is the latest evidence of the dramatic expansion in First Union's capital markets operation that has taken place since January 1994. At that time, First Union combined its corporate banking and funds management divisions into a new capital markets group to offer Wall Street-type services to its middle-market commercial customer base.
Since then, First Union has hired more than 70 well-compensated Wall Street veterans to staff its private placement, loan syndication, asset securitization, leasing, merger and acquisition, and public finance divisions. The unit made a $152 million pretax contribution to First Union's corporate earnings last year and plans call for the annual figure to reach $500 million by 1998.
In June, the Federal Reserve Board approved First Union's request for enhanced Tier 2 section 20 powers, making it one of only 18 U.S. banks with the ability to underwrite debt and equity securities.
First Union said the new West Coast office will focus on the health care, communications, mortgage banking, leasing, oil and gas, defense, and general manufacturing industries. The First Union capital markets group also plans to market its full line of capital markets and investment banking services to prospective clients in the western states.
Mr. Dahl's job will be to focus primarily on transaction origination and building new client relationships on the West Coast. He said he looked forward "to leveraging my transaction, structuring, and origination skills" in the new position.
Mr. Mahoney agreed that Mr. Dahl's primary job will be to bring in new business. "The West Coast is a big market and there's lots of relationships out there that we've never approached or had the opportunity on an ongoing basis to talk to," he said.
First Union is the nation's ninth-largest bank holding company, with assets of $83 billion. A pending merger with $35 billion-asset First Fidelity Bancorp. of New Jersey, scheduled for completion next June, would move it up to seventh.
