Wachovia Corp., known for its conservative ways, has long conducted its corporate banking business at an even tempo. Now Donald Carson, president of Wachovia Capital Markets Inc. since 1994, is picking up the beat.

Mr. Carson has increased his staff by about 40%, to 165, in the past year, mainly by recruiting internally but in part by raiding rival companies. Under his leadership, the Atlanta-based capital markets unit is expanding in merger and acquisition advice, loan syndications, financial advice, and securitizations.

"This has been a building year," Mr. Carson said in a recent interview in his office here. "Next year is going to be a 'let's-go-get-some-revenue' year."

Observers say the Winston-Salem, N.C., banking company's next step in corporate finance should be well worth watching.

"Wachovia is like a cat waiting perched on a fence," said Michael Ancell, an analyst at Edward Jones Inc. "They're slow until they see something they like."

So far, the 47-year-old Mr. Carson - an accomplished musician who stumbled into banking about 20 years ago - is getting high marks for his efforts to establish $46 billion-asset Wachovia as a player in corporate finance.

"Don is a risk taker, and that's critical in that particular environment," said Mark Rogus, a former colleague of Mr. Carson who is now a client, as senior vice president and manager of corporate finance at Corning Inc. "He's willing to push the envelope in terms of what Wachovia wants to do."

High on Mr. Carson's to-do list for 1997 is to evaluate whether Wachovia should ask the Federal Reserve for authority to underwrite securities. This activity is increasingly seen as vital to banks' ability to provide a full range of services to their corporate clients.

Most of the nation's 50 largest banking companies have set up so-called section 20 subsidiaries that enable them to underwrite corporate debt, among other things. Wachovia, which has steered clear because of cumbersome and costly cross-marketing restrictions, is taking another look because the Fed has begun loosening these rules.

"Now that most of the onerous walls of the section 20 have come down," Mr. Carson said, "we want to understand the difference between what we have been doing, and establishing a section 20." He added, however, "We don't want to get our cost structure so high that we can't serve our customers."

The company hopes to decide whether to pursue section 20 powers by the end of the first quarter, he said.

For now, though, most of Mr. Carson's attention is going into businesses that it can conduct through its existing structure - and that leaves plenty of latitude. "There are a surprising number of things you can do without a section 20," he said.

For instance, Wachovia Capital Markets handles private placements of debt, certain leases, financial advice, and foreign exchange consulting services. And Wachovia International Capital Corp., a subsidiary of the capital markets unit, handles foreign banking activities for the latter's customers.

This side of the business is of special interest to Mr. Carson, who earned his stripes in international bank operations at Harris Bankcorp, Chicago, in the mid-1970s after attending graduate school. In 1977, he jumped to Wachovia, working in international trade finance.

Mr. Carson came to banking by an unconventional route. As an undergraduate, he studied music composition at Beloit College in Wisconsin. Encouraged by his father, he refocused on foreign languages and international studies and earned advanced degrees from the University of Chicago and the American Graduate School of International Management in Arizona.

Though Mr. Carson has put his musical aspirations on the back burner for now, he still sings in the Atlanta Symphony Orchestra chorus.

But the bulk of his time is spent sprucing up Wachovia's capital markets business and filling in gaps in its service menu. For instance, Wachovia recently struck a deal to offer its leasing services to municipal clients of Dillon, Read Inc.

And Mr. Carson oversaw last year's partnership with Montreux Equity Partners, a San Francisco-based investment firm, to enable it to participate in the private equity business.

The private equity business is a "natural fit" for Wachovia's current client base, allowing it to serve more fully companies that are too young for the public markets, said analyst George Bicher of Alex. Brown & Co. Wachovia just signed a deal, and has about 30 more in the queue, Mr. Carson said. But choosing will be a slow process, he added. The bank aims to look at 150 deals for each one in which it invests.

In addition, Wachovia recently embarked on a venture with a major Wall Street firm to originate and package commercial mortgages.

Some clients say they're benefiting from Wachovia's expanded capabilities.

Corning, the glassmaker in Corning, N.Y., started using Wachovia for treasury services 15 years ago. It recently awarded a lease deal to Wachovia. Now Wachovia is co-arranging the financing for Corning's $450 million spinoff of its clinical labs and its $250 million spinoff of the pharmaceutical service business, both to be completed by yearend.

"We are pleased to see them step up to do this," said James B. Flaws, assistant treasurer at Corning. "We feel comfortable expanding our scope of activities with them."

Still, some rivals say Wachovia may find it hard to compete for new clients. "Wachovia still has a lot of problem paying for performers," said Paul White, managing director in capital markets at SunTrust Bank. "Your assets are people in the capital markets."

Other skeptics also wonder whether Wachovia has held back too long.

"They're keeping their powder dry, but the question is: Are they keeping their powder too dry?" said Michael Mayo of Lehman Brothers, who dubbed Wachovia "the Cal Ripken of banking" in a report last year because of its consistent record.

Mr. Carson said the company's deliberate style is justified.

"We're starting with commercial banking and migrating down the balance sheet, all the time making sure that it's relevant to the client and that we're the Wachovia that they expect," he said.

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