Regions Financial has been without an investment banking business-more or less-ever since it had to unload its Morgan Keegan unit in 2012. The Birmingham, Ala., company is now taking steps to fill the void.

It's going to have plenty of company.

Regional banks including Fifth Third Bancorp and SunTrust Banks, as well as smaller banks, are putting new emphasis on their investment bank divisions even as Wall Street struggles to overcome trading losses and bad PR associated with its markets businesses.

The regionals are counting on the units to boost noninterest income and help offset razor-thin loan spreads. They also offer bank executives additional products and services to cross-sell to existing customers.

Regions has reorganized itself to place a new emphasis on its corporate bank, which includes capital markets and investment banking.

"The genesis was to get everyone who was focused on middle-market and corporate banking aligned together," said John Turner, head of Regions' corporate bank. "We're partnering our geographic bankers with our specialized industry bankers so we can deepen [customer] relationships."

The field is crowded, but since regional banks have many institutional borrowers, they should be able to cross-sell investment banking, said Thomas O'Neill, co-chief executive of Kimberlite Advisors, a New York boutique investment bank.

"In investment banking, if you can transport your relationships, you can be successful," O'Neill said.

Regional banks are growing investment banking by poaching talent from rivals, or through acquisitions. The $91.8 billion-asset KeyCorp, in Cleveland, last month agreed to acquire Pacific Crest Securities to add a Portland, Ore., boutique investment bank that specializes in the technology industry.

The $182.6 billion-asset SunTrust in Atlanta acquired SunTrust Robinson Humphrey in 2001 and has gradually expanded its product offering. The investment bank has historically derived most of its income from bond originations, but has recently expanded its work in mergers-and-acquisitions advisory services. The growth has spurred Chairman and Chief Executive Bill Rogers to regularly tout SunTrust Robinson Humphrey's financial contribution to SunTrust's bottom line.

"Instead of an eight-cylinder engine hitting on six cylinders hard, all eight cylinders are now starting to pump pretty aggressively," Rogers said on July 21 during a conference call with analysts.

Investment banking income at SunTrust rose 28%, to $119 million, in the second quarter compared with a year earlier. Retail investment services rose 10%, to $76 million.

Fifth Third, in Cincinnati, has expanded its Fifth Third Securities unit through new hiring, largely as a way to expand relationships with existing clients. Before 2010, the $127.3 billion-asset Fifth Third offered investment banking services on an "as needed" basis to current clients. Management is changing the mind-set, said Bob Marcus, head of capital markets at Fifth Third Securities.

"We would deliver capital markets opportunistically when our core clients needed it," Marcus said.

Those services included foreign currency exchange hedging or helping find credit facility participations with larger banks. Fifth Third's executives decided to try to expand the business in an effort to generate more income, he said.

"We did pretty well in that, and we didn't take a lot of risk," Marcus said. "It wasn't going to get us into the fee mix that we wanted because those aren't high-value-added services."

The $118.7 billion-asset Regions may offer the most interesting example. The Alabama company sold Morgan Keegan in 2012, after it was accused of mismanaging funds that were hit hard by the subprime financial crisis. (Regions agreed to indemnify the buyer, Raymond James Financial, for all legal costs associated with Morgan Keegan.)

Since the Morgan Keegan sale, Regions has been absent from many investment banking services. But now Regions is trying to focus on advisory services to middle-market companies, said Terry Katon, executive managing director and head of capital markets. Regions defines the middle market as a company that has between $250 million and $2 billion in yearly revenue.

Investment banking divisions at the Wall Street banks tend to avoid middle-market clients because they're not large enough to be financially worth the trouble, Katon said.

"It's a small piece of the pie for them," Katon said. "Middle-market companies are hard to move the needle for them. They need to go elephant hunting. So we're able to take share from [the largest banks]."

Regions Securities has a more limited menu of services than Morgan Keegan, and that's by design, Katon said. Regions Securities is not offering, for example, retail brokerage services, equity research or municipal finance.

If Regions, Fifth Third and other regional banks can continue to hire talented bankers from the largest banks and Wall Street banks, and pair them with their established clients, they should be able to make the plan work, O'Neill said.

"There's been a big dislocation among the really large banks," O'Neill said. "They're trying to determine how far they're going [with some investment banking products]. It's really a question of whether you are able to get the right talent."

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