In the last three years of a 23-year career at First Union Corp., G. Kennedy Thompson has been on a remarkable rise.

He reached new heights Thursday when the Charlotte, N.C., banking company said Mr. Thompson, a vice chairman and head of capital markets, will become president and chief operating officer at yearend. He succeeds John R. Georgius, who is leaving First Union.

It was a move that surprised few observers. At a bank mired in profitability and customer service issues, Mr. Thompson, 48, carried a reputation as a banker armed with an uncanny knowledge of how to build a business-even one he wasn't expert in.

"I don't believe you need to know everything about securitizing a mortgage to manage the capital markets business," he told American Banker in April. He was unavailable for comment Friday.

But analysts also caution that Mr. Thompson has risen through a series of promotions that had as much to do with his most-favored status with chief executive officer Edward E. Crutchfield as with his achievements.

"He's been moving from good position to good position on a basis I'm not quite sure of," said Peter Kuper, an analyst with Keefe, Bruyette & Woods Inc. "On the other hand, capital markets is doing very well. They identified an opportunity and really nailed it."

A commercial banker who headed First Union's Florida franchise in the early to mid-1990s, Mr. Thompson took over the two-year-old capital markets division as co-head in 1996.

Mr. Thompson has built the business through strategic acquisitions, unrestrained by the cost-cutting that was occurring in some other parts of First Union.

"He was given carte blanche," Mr. Kuper said. He likened it to a salary cap on a sports team: If the cap were lifted, the wealthiest teams would consistently win championships.

In 1998, Mr. Thompson spearheaded the $491 million acquisition of Wheat First Butcher Singer, a Richmond, Va., brokerage, and led a deal to buy Bowles Hollowell & Conner, a Charlotte-based merger and acquisition boutique. He then set about restructuring the capital markets division to maximize cross-selling and retain corporate clients.

The spending spree also included a $100 million advertising campaign-an unheard of budget for a capital markets team-and a boost in staffing. The capital markets team opened with 700 bankers and by early 1999 was staffed by 5,200. Capital markets revenues jumped from $3.5 billion in 1996 to $6.6 billion last year.

By tapping Mr. Thompson, the bank also has picked a banker who succeeded in one area that has proven most difficult for the rest of the bank: integrating CoreStates Financial Corp.

CoreStates contributed to a 263% rise in the so-called "traditional banking" part of First Union's capital markets business, which includes interest income from corporate and asset-based lending.

Benjamin C. Bishop, president of Allen C. Ewing & Co., a firm that specializes in Florida banking, described himself as a personal friend of Mr. Thompson and characterized the promotion as "a good move." The two became golfing partners while Mr. Thompson oversaw the bank's Florida franchise in the mid-1990s.

"He is very energetic and he is very bright," Mr. Bishop said. "He was clearly being channeled by First Union to be one of the top managers at the bank. He is probably there a little quicker than people had in mind but he is very capable."

Mr. Bishop also said Mr. Thompson "has vision and broad experience with First Union. He is the right man for the job."

Still, the jury is still out for many analysts, who will be looking to First Union's conference with them Wednesday in New York to glean more information about Mr. Thompson and the bank's ability to return to glory.

Regarding the appointment of Mr. Thompson, "they are nibbling around the edges," said one Wall Street analyst, who requested anonymity.

After meeting with management on Thursday, Lori Appelbaum, an analyst for Goldman Sachs & Co., said she saw the appointment coinciding with a move by management to take a more hands-on approach to running the company.

"They are definitely becoming more engaged in the day-to-day operations of the company," Ms. Appelbaum said.

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