Fleet Financial Group in Boston has hired 14 executives from Citicorp to launch a high-yield debt underwriting unit, the banking company's investment banking chief confirmed Thursday.
"We felt that the high-yield market was so active, and now we can provide our customers access to those markets," said Timothy Conway, managing director of Fleet's investment banking unit.
The new group includes Citicorp managing director Michael Browne and vice president Scott Vallar, who will be co-heads; and vice presidents Jana Thompson and John Walsh.
Mr. Conway is also a veteran of Citicorp.
Many banks have been building their securities underwriting capabilities because the business has high revenue potential, analysts said. Just last week, Fleet's crosstown rival, BankBoston Corp., agreed to buy investment bank Robertson Stephens from BankAmerica Corp. in a transaction it valued at $550 million.
Mr. Conway said Fleet has looked into acquiring investment banks over the last year, but the "prices were too high, and the cultural fit was not certain."
He said he approached the high-yield group at Citicorp several months ago, before that company's $70 billion merger agreement with Travelers Group.
Some analysts said Fleet's decision to buy staff rather than buy an investment bank outright is a cost-effective one. It also will help the $97.7 billion-asset banking company navigate its entry into the world of equity underwriting later on.
"They can hire and build the unit from within, and hit the ground running" in debt underwriting, said Gerard Cassidy, an analyst at Tucker Anthony Inc. "But they can also be more cautious and test the waters."
Analysts said underwriting has become an increasingly attractive source of fee income for banks and a way to broaden long-standing corporate lending relationships.
"It's clearly a push to improve fee revenues," said Michael Mayo, an analyst at Credit Suisse First Boston. "Fleet's strength is middle-market companies. They are hoping to deepen their wallet share with these companies."