Fleet Financial Group had an eye on regulatory concerns as it negotiated and formulated its merger with Shawmut National Corp.

Saying it will divest $3 billion of deposits, Fleet may have preempted the antitrust threat that hangs over mergers of banks with common market areas.

But that is a lot of "product" to dump onto the New England market, which could drive down the prices paid for acquisitions, analysts said.

Fleet's selloff of branches, toward anticipated cost cuts of $400 million, would give the company bargaining chips with the U.S. Department of Justice's antitrust division, which assesses the competitive implications of mergers.

The expense reductions would equal nearly half of Shawmut's entire cost base of $850 million. Analysts also point out that Fleet will likely cut 200 branches from the two companies' total of 1,143 after the merger.

But since Shawmut has only 338 branches to begin with, the divestitures would equal nearly 75% of its entire branch system - though they may not all come from the acquired bank.

"This is very similar to the Security Pacific deal, where BankAmerica Corp. got rid of 80% of the incremental branches," said analyst Robert Albertson with Goldman, Sachs & Co.

Fleet will end up the biggest bank in every New England state except Vermont, but its share of deposits in some cases adds up to about 17% or 18%. Mr. Albertson pointed out this is below the more than 20% Barnett Banks Inc. has in Florida or First Union Corp. in North Carolina.

"Why should there be any antitrust issues?" the analyst said.

Divesting branches is the easiest way to get a merger like this approved, according to Thomas Vartanian, a former staff attorney with the Office of the Comptroller of the Currency and now a partner at Fried, Frank, Harris, Shriver & Jacobson in Washington.

The regulators don't care how many branches a bank owns in a state. But they do care about domination of individual communities, he said. By strategically selling branches, the merging banks can reduce their market shares enough to satisfy the Justice Department's anti-competitive concerns.

"It is a smart strategy if it can avoid a protracted struggle with the Department of Justice and if you can do it in a way that doesn't cause you to lose the crown jewels of the merger," Mr. Vartanian added.

But branch sales of this magnitude will make New England more of a buyer's market. Bank of Boston Corp. could be essentially the only acquirer left in town, able to pick and choose among available assets.

"The largest beneficiary is arguably Bank of Boston, because they'll now operate in a much healthier banking market," said Moshe Orenbuch of Sanford Bernstein & Co.

With Fleet busy integrating Shawmut, Bank of Boston may find it a favorable to do in-market acquisitions.

There has been much talk that Bank of Boston and neighboring BayBanks Inc., a retail powerhouse, will become targets themselves. But analysts view that as unlikely, at least in the near-term.

Both banks have expressed interest in remaining independent, and institutions that can afford to buy them, like NationsBank, Banc One Corp. or BankAmerica, are not likely to pay a high price to get into the slow- growth New England region.

An out-of-region but geographically closer acquirer like Bank of New York Co., PNC Bank Corp., CoreStates Financial Corp., or First Fidelity Bancorp. are more likely to approach the two remaining New England regionals, analysts said.

Jaret Seiberg contributed to this article.

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