Fleet Financial Group may face antitrust questions about the small business powerhouse it would create by buying Shawmut National Corp.
The latest data show the two companies holding 18.1% of New England small business loans, and 23.4% of the regional dollar amount. The data - call reports from last June for business loans of less than $1 million - show Fleet and Shawmut with 35,177 such loans, worth nearly $2.6 billion, in New England and New York.
Those close to the transaction say it won't be held up because of small business lending. "I don't see small business lending in this transaction being any more of an issue than in other transactions," said William Sweet, a law partner in the Washington office of Skadden Arps Slate & Meagher, who is representing Shawmut in the deal.
The deal warrants extra scrutiny because of its size, he said, but the small business aspect probably won't raise special attention from the Federal Reserve and the Justice Department.
However, others say the numbers are so large that the deal will draw attention from the Federal Reserve Board and the Justice Department when a formal application is made. A spokesman at the Federal Reserve said it was too early to comment, and Justice Department officials could not be reached. Officials from Fleet declined to comment.
In 1992, the Federal Reserve looked at the concentration of small business lending as part of its review of the merger between BankAmerica Corp. and Security Pacific Corp. Analysis of the competitive effects of the deal were to be "based on the availability of the cluster of banking products and services to a range of customers in local markets."
In the end, BankAmerica sold off $2.7 billion in loans - of which an undetermined amount were to small businesses - and the deal was approved by both the Federal Reserve and the Justice Department.
Many of Fleet's rivals, however, are looking forward to the merger. Besides having one less competitor, many hope to get a piece of what is expected to be a large pool of divested branches and deposits.
John Carusone, president of the Bank Analysis Center in Hartford, Conn., said he expects the combined companies will divest between 50 and 75 branches with up to $6 billion in deposits. He is putting together a consortium of community banks to bid for a large number of these branches.
"From Fleet's standpoint, they would like to make any transaction as easy as possible so they would like to deal with only one or two purchasers," Mr. Carusone said. "But in reality, they don't want to create a situation where a big competitor comes in on the side."
People's Bank of Bridgeport, Conn., is hoping to pick up some branches, as well. Jane Sharpe, a spokeswoman, said most of the $6 billion-asset thrift's commercial customers borrow less than $1 million, and as the state's third largest institution behind Fleet and Shawmut, People's is expecting to make the most of the merger.
"As the consolidation shakes down, there is a major window of opportunity for all banks," she said.
