Umpqua forms investment bank to advise on M&A, capital raises

Umpqua Holdings has formed an investment banking unit, as the Portland, Ore., company seeks to capitalize on a business line that has been profitable for other regional banks.

The $26 billion-asset company hired Chad Riddle in July to run the unit; Umpqua announced his hiring on Thursday. Riddle, 51, previously worked in middle-market investment banking for KeyBanc Capital Markets and had also worked for Wells Fargo Securities.

Regional banks such as Fifth Third Bancorp in Cincinnati and SunTrust Banks in Atlanta have benefited from having investment banking subsidiaries in recent years, as they focus on smaller clients that Wall Street giants like Goldman Sachs and Morgan Stanley might ignore. Fee income from investment banking services can also help regional banks offset fluctuating demand in commercial and consumer lending.

“The addition of a capital markets division marks another important milestone in Umpqua’s capacity to serve middle-market business customers,” Tory Nixon, head of commercial and wealth, said in a news release. Riddle will report to Nixon.

The business of providing M&A advice to smaller companies is projected to remain strong. In a survey conducted earlier this year by the investment bank unit at Citizens Financial Group in Providence, R.l., about half of 600 executives at middle-market companies said they expected to be involved in a deal this year.

Regional banks’ investment banking groups have been active themselves in M&A. KeyCorp’s KeyBanc Capital Markets in October acquired Cain Brothers, a boutique investment bank that focuses on the healthcare sector.

In addition to M&A advice, Umpqua Capital Markets, which is headquartered in Portland, will also assist companies with raising equity capital and subordinated debt. Umpqua declined to say how many employees are assigned to the capital markets division or how many employees Riddle expects to hire.

Umpqua’s investment banking product offerings have been limited to date. The company’s Umpqua Investments unit is a broker-dealer and investment advisory firm. Umpqua also operates a private bank for high-net-worth clients.