Morgan Keegan & Co., a Memphis unit of Regions Financial Corp., is expanding its fixed-income capital markets division beyond its traditional market in the Southeast.

The division, which entered the Northeast just over a year ago, expanded there last week by hiring nine municipal banking, sales, and trading professionals for its New York office. Six months ago it added two investment bankers in Florida.

By 2010 the division wants to be in the Midwest, according to its top executive.
The division has over 500 professionals in bond research, sales, trading, underwriting, and investment banking.

Morgan Keegan, which is the 11th-largest underwriter of fixed-income instruments nationally, "managed to get to that position by having significant market penetration" in the Southeast, Robert Baird, the president of the fixed-income capital markets division and the head of public finance investment banking, said in an interview last week.

"We wanted to grow our market share in parts of the country where we haven't been in the history of the company," he said. "The Northeast is one of those areas. We will continue to branch out into other areas of the country where we are not currently represented."

The Northeast and Florida, a state where Morgan Keegan had only two bankers until six months ago, are the company's "two primary focus areas for this year," Baird said, but he hopes to continue to expand from there.

"We see some real growth opportunities in the Midwest," he said.

Analysts said Morgan Keegan is expanding its business while many other asset management companies are contracting.

Baird said: "This is a strategy that we have had for some time, and it is a strategy based on attracting talented bankers with good relationships. There are excellent bankers in these markets, and we continue to think that public finance is a relationship-driven business that we can grow."

Morgan Keegan wants to increase the number of transactions it manages or co-manages, he said. "We are already co-managing a lot. We want to increase our level of investment where we are the manager or the senior manager in these deals."

The new hires in the Northeast include executives from UBS, JPMorgan Securities, Morgan Stanley, Bank of America Securities, and Bear Stearns.

The new employees in the New York office — three investment bankers, an underwriter, a trader, and four salesmen — joined the investment banking veteran Mike Tierney, who was hired last year as a managing director after working at Goldman Sachs  for 27 years.

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