Fleet Financial Corporation and Shawmut National Corporation, two of the three largest lending institutions in New England, announced on Tues., Feb. 21, that their boards had agreed to merge. Fleet will acquire Shawmut through a stock transfer with an estimated worth of $3.7 billion.
The merger of the two banks will form the ninth-largest banking institution in the nation and the largest in the Northeast, but will also likely cost thousands of workers their jobs. As part of the merger, the new bank hopes to streamline and consolidate service by cutting 10 percent of its combined work-force or 3,000 jobs-1,100 in Connecticut alone-in the next 18 months. At the mer-ger's announcement, bank officials also stated that they hope to reduce overhead and operating costs by $400 million, or 16 percent of their operating budget, annually.
The announced merger has yet to be approved by state and federal regulatory agencies. Connecticut Governor John Rowland has gone on record opposing the merger because of the job losses it would bring and because the new Fleet bank would hold over 30 percent of all bank deposits in the state. The Associated Press also reported on Thurs., Feb. 23 that shareholders had already filed six lawsuits against Shawmut to block the merger.
In order to comply with antitrust regulations, the banks announced that they would sell 75 to 90 branches, mainly in the Hartford area. While they announced that another 150 overlapping branches would likely close, Vincent Loporchio, Shawmut's vice-president for media relations, said specific sites had not yet been determined.
If all does go according to Fleet and Shawmut's plans, Shawmut patrons will see gradual changes in the coming months, and bank officials do not expect major problems. "In the immediate future you shouldn't see much difference, but in the next few months, the...consolidation will take place when [Shawmut] accounts will be transferred to Fleet. Most Shawmut customers have already experienced something similar in previous mergers, and it is our expectation that it will be fairly seamless once again," Loporchio said.
Local competitors of Shawmut and Fleet had mixed reactions to the merger announcement. Bank of New Haven Executive Vice-President Lorraine K. Young said she felt the merger would help her bank's business.
"We think [the merger will] have a positive impact for us because there are many people who don't like the large bank concept. Since we're a local community bank, we feel that it will have a great benefit for us.... Our interpretation is that there will be many people who will not like dealing with a bank that size."
Barbara Johnson, New Haven regional manager for People's Bank, said she did not anticipate many changes in her bank's business since it already competes with both Shawmut and Fleet. Johnson did say, however, that the bank merger could have a negative impact on New Haven as a whole. "A merger like this would create empty office space because they both have regional headquarters here.... When you merge two large institutions that both commit resources and time to the community, that's a concern for the city."