Bank of Boston Corp. has completed the partial spinoff of its mortgage company to two venture capital firms, an interim step toward a three-way joint venture that will also include Barnett Banks Inc.
Thomas H. Lee & Co. and Madison Dearborn Partners paid $135 million to Bank of Boston on Friday for 55% of BancBoston Mortgage.
"We've closed on the venture and will have Barnett coming aboard soon," said Joe K. Pickett, who was chairman of BancBoston Mortgage and now holds that title with the new venture, which has been named HomeSide Inc.
Most other BancBoston Mortgage executives will accompany Mr. Pickett to HomeSide, which will have $75 billion of servicing - $42 billion from BancBoston and $33 billion from Barnett.
The alliance between the two banks is seen as a ground-breaking way to capitalize on economies of scale through combining mortgage systems and servicing.
Barnett's Jacksonville, Fla., servicing center will be shut and consolidated with BancBoston's center in the Florida city, Mr. Pickett said.
Barnett does not yet know how many of its servicing employees will be offered jobs with the new venture.
"No one is saying how many employees HomeSide will have when this is finished," a Barnett spokeswoman said. Employees, she said, are being kept informed as matters develop.
The mood was perhaps a bit more upbeat at BancBoston's Jacksonville servicing center. Mr. Pickett spent Monday morning hosting a rally for employees to celebrate the new ownership and name change.
"We reiterated the fact that even though a new company is being created, it's a continuation of the innovation we've always had," Mr. Pickett said.
HomeSide's current ownership structure - with Bank of Boston holding 45% and Thomas Lee and Madison Dearborn owning the other 55% - is expected to persist until the second quarter.
At that time, Barnett plans to take a one-third ownership stake and get an undisclosed amount in exchange for contributing its servicing portfolio. Bank of Boston would then reduce its stake to one-third, as would Thomas H. Lee and Madison Dearborn collectively.
For structural reasons, Mr. Pickett said, the agreement with the venture capital firms closed first. That accord was announced Dec. 11, and the planned teaming with Barnett was made public March 5.
