Magazine article American Banker

Southern National Joins the Move to Offer Investment Banking Menu

Magazine article American Banker

Southern National Joins the Move to Offer Investment Banking Menu

Article excerpt

Responding to intensifying competition for corporate customers, Southern National Corp. said Thursday that it has struck a deal to buy a Richmond, Va., investment bank.

The pact for Craigie Inc. places $22 billion-asset Southern National among a select group of mid-tier regional banks that have recently added investment banking to their product menu.

Last week, for instance, BOK Financial Corp., a $5.1 billion-asset banking company in Tulsa, received Federal Reserve approval to launch an investment banking unit, Alliance Securities.

These mid-tier banks are feeling the squeeze from bigger regional rivals-including commercial and investment banks-that have begun offering soup-to-nuts capital markets services.

"Over the next 10 to 20 years, if you don't have this expertise, you're not even going to be in the banking business," said R. Harold Schroeder, an analyst with Keefe, Bruyette & Woods Inc.

Terms of Southern National's cash-and-stock deal for Craigie-a 68-year-old firm that concentrates on fixed-income underwriting and advisory work-were not disclosed. But securities experts said investment banks of that size typically command two times book value, indicating a price of around $36 million.

Officials of the Winston-Salem, N.C., banking company said the acquisition-which requires approval from the Federal Reserve Board-would broaden its product line, boost fee income, and stem the loss of customer relationships to competitors.

"We have been in a position where we did not have the full array of products to offer our large, middle-market commercial base of customers as some of our other competitors might," said Burney S. …

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