BOK Financial Corp., the smallest commercial bank in the securities business, is on the prowl for an investment bank.
The Tulsa, Okla.-based banking company, with $5.5 billion of assets, plans to apply to the Federal Reserve Board this spring for permission to underwrite corporate debt and equity, said E. Dean Chittendon, president and chief executive of Alliance Securities Corp., BOK's securities unit.
It is also looking around for potential acquisitions to beef up its investment banking prowess.
"In order to keep up with the demands of the market and the needs of bank customers, we are going to have to look at acquiring some smaller boutique firms," Mr. Chittendon said.
BOK Financial established Alliance last May when it received Tier 1 underwriting powers from the Fed. Mr. Chittendon was hired from an Oklahoma City investment banking firm to run the new securities unit.
So far, Alliance has focused on underwriting and advising the municipal markets, a natural for smaller regional banks looking to expand into investment banking, according to industry observers.
Alliance has closed nine municipal bond deals during its eight months of business.
It has about two dozen more in the pipeline, according to the bank, including a $16 million debt issue for the Tulsa Parking Authority and a $18 million debt issue for Oklahoma State University.
But that is just a sample of things to come, according to Mr. Chittendon.
He said the bank makes about $75 million in student loans each year to Oklahoma students. Alliance plans to start securitizing these next month, with the intention of selling them upstream to institutional investors.
Other products bank executives are contemplating adding to their corporate finance menu include asset and receivables securitizations.
At least one analyst said it is surprising that a bank the size of BOK is interested in acquiring corporate equity and debt powers. Diana Yates, a bank equity analyst with A.G. Edwards in St. Louis, pointed out that competition between securities units at commercial banks is fierce.
"It's not going to compete with NationsBanc Montgomery, but it could have some good corporate customers with lending relationships," said Ms. Yates. She said, in these cases, corporate equity and debt capabilities "would give it a full share of the wallet."
Alliance has been slowly expanding its customer base by moving into Texas and Arkansas, the two other southern states where BOK has commercial banking subsidiaries. It has opened small regional offices in Little Rock and Dallas, bringing the total number of investment bankers with Alliance to nine. BOK executives said they plan to add at least one more banker to the Dallas office.
"Ultimately we want to be a regional investment banking firm," said Brett A. Dean, managing director and chairman of Alliance, as well as senior vice president of the Bank of Oklahoma.
Bank executives said they hope to establish regional Alliance offices in cities as far-flung as Denver and Phoenix over the next five years.
In fact, Mr. Dean said, one reason the subsidiary's name doesn't include the moniker "BOK" is that bank executives did not want to limit their regional aspirations.
Although the holding company is based in Tulsa, Alliance's headquarters are in Oklahoma City, close to many of its municipal and state government clients.