First Union Corp. To Buy Wheat First

First Union Corp., one of the nation’s largest banking companies, said Wednesday it will buy regional brokerage Wheat First Butcher Singer Inc. for $492.4 million in stock.

The deal is the latest in a wave of brokerage acquisitions by commercial banks looking to expand and build strong franchises on Wall Street as the firewall between the two industries disappears.

First Union, the nation’s sixth-biggest banking company, had initially planned to build its investment banking business from scratch but decided it would be wiser to buy one to avoid being left behind by its competitors.

“Clients have been telling us that they want and need these services sooner rather than later,” said Ken Thompson, who heads First Union’s capital markets division. “We risked losing some of our best clients who would be forced to seek other providers.”

The deal will create the largest retail brokerage in the Southeast and eighth largest in the nation. It followed plans announced last month by Charlotte, N.C.-based First Union to buy Richmond-based Signet Banking Corp. for $3.25 billion in stock.