Post-Merger 1st Union Will Be 'Gorilla' in Retail Investments

By Plasencia, William | American Banker, June 26, 1995 | Go to article overview

Post-Merger 1st Union Will Be 'Gorilla' in Retail Investments


Plasencia, William, American Banker


First Union Corp. was one of the most ambitious banks in retail investments even before it launched its bold invasion of the Northeast.

And now that the North Carolina banking powerhouse is preparing to merge with First Fidelity Bancorp, its mutual funds and other investment offerings seem destined for even more prominence.

The megamerger announced last week establishes First Union in some of the nation's most affluent markets, gives the bank a crack at recruiting battalions of First Fidelity customers as investors, and heats up an already lively market.

"We now have a big gorilla in the backyard," said Joy P. Montgomery, president of Money Marketing Initiatives, Morristown, N.J. "They'll be a formidable competitor in the area of investment products."

The merger, which is expected to close by early next year, will create a $123 billion-asset banking company that sprawls along the Eastern Seaboard. First Union's proprietary mutual funds would grow to $9.5 billion of assets under management, tied for fifth place with Banc One Corp. among bank managers of mutual funds. And First Union would climb to 15th place in trust assets, with $38 billion under administration.

First Union, which has made no secret of its desire to compete with the giants of the mutual fund and money management industries, said the planned merger with First Fidelity significantly will strengthen its hand.

"We're gaining not only more territory, but also a broad base from which to build our business," said Donald A. McMullen Jr., a First Union executive vice president who oversees the company's entire retail investment business.

Over the past three years, First Union has pumped substantial resources into investment products.

With the firm backing of chairman Edward E. Crutchfield Jr., First Union has trained 2,400 branch employees as brokers; acquired a $3 billion mutual fund family, the Evergreen Funds; and tested interactive video technology for delivering mutual funds to customers.

But though First Union's investment business has taken off, it hasn't begun to soar. For one thing, it has saturated some of its long-held markets and is in need of fresh prospects.

That's where First Fidelity comes in.

The New Jersey-based bank's branch network covers five states, and takes in the affluent New York, New Jersey, and Connecticut suburbs of New York City. …

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