Deal Seen Giving 1st Union Major Economies of Scale in Capital Markets Area
Dunaief, Daniel, American Banker
First Union Corp.'s capital markets group will gain major economies of scale from the acquisition of First Fidelity Bancorp., say bank officials and industry experts.
While capital markets expansion did not drive the merger, Charlotte, N.C.-based First Union believes greater penetration in the Northeast will enhance its risk management businesses, enabling it to market its derivatives and debt underwriting services to First Fidelity's middle- market customer base.
"When you put together private placements, mergers and acquisitions possibility, foreign exchange, and risk management, the acquisition becomes
significant," said Louis A. "Jerry" Schmitt Jr., managing director of First
Union Capital Markets.
Experts say that First Fidelity's middle-market client base presents an
especially good opportunity for First Union's growing risk management practice.
"There could be a natural flow of plain vanilla interest rate products and foreign exchange from Fidelity's clientele," said Heinz Bingelli, managing director at Emcor Risk Management Consulting Corp., noting the buildup in First Union's trading room operation.
In the last two years, First Union has hired approximately 30 Wall Street traders for its derivatives business. …