Some Small Banks Become Critics of Process, Results In Fleet-Deal

Fleet Financial Group Inc. has sealed a deal to sell the bulk of its castoff branches to Sovereign Bancorp, but negotiations with community banks are apparently going less smoothly.

Fleet and BankBoston Corp. set aside 28 eastern Massachusetts branches for community banks when they announced that they would sell 306 offices to complete their merger. Many bankers were hoping that Fleet would make more branches available and that Connecticut and Rhode Island offices would be included.

"A lot of the community banks that participated in the process were led to believe there would be a more meaningful carve-out than what was announced," said John S. Carusone, a bank consultant who worked with four community bank bidders.

"The communication was horrible," said another consultant who asked not to be named. "We would hear one thing from someone from Fleet and then something totally different from someone else later that same day."

Fleet said this month that it would sell the lion's share of the branches to Wyomissing, Pa.-based Sovereign. Two community banks have also reached deals to buy six of the remaining 28 branches, but many bidders, including a consortium of nine small banks, have apparently been shut out.

Nondisclosure agreements have kept the bidders from talking about the process. But Mr. Carusone, president of Bank Analysis Center in Hartford, Conn., said that some of his clients would have been saved the hassle of bidding if Fleet had been more candid about what it was going to offer to them.

"If there wasn't going to be a real community bank carve-out, it would have been helpful to say something earlier on," he said.

A Fleet spokesman could not be reached to comment.

One bank still in the hunt for branches has voiced its dissatisfaction with Fleet. Boston Bank of Commerce, a minority-owned institution that was long expected to win at least a couple of offices, sent a letter to state and federal regulators last week complaining that Fleet is pushing Bank of Commerce to accept branches "of lower quality than those bid on."

"Boston Bank of Commerce has become extremely concerned that Fleet is not working in good faith to reach an agreement," wrote Kevin Cohee, chairman of the $150 million-asset institution. A spokesman for Boston Bank of Commerce declined to comment because negotiations are continuing.

Of course, not everyone is crying foul. Stanley J. Lukowski, whose Eastern Bank Corp. won four branches with $200 million of deposits south of Boston, said he has no complaint about the bidding process.

"We were given a book of information that was very complete and allowed us to bid on what we wanted to," said Mr. Lukowski, who is chairman, president, and chief executive officer of $2.7 billion-asset Eastern.

He said the 28 branches reserved for community banks "was in the range that I had expected."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER