Connecticut's top legal officer, unhappy with a divestiture plan approved Thursday by the U.S. Department of Justice, said he would consider bringing an antitrust suit to block the pending $16 billion merger of Fleet Financial Group and BankBoston Corp.
Attorney General Richard Blumenthal said the Connecticut portion of the proposed multistate selloff -- $1.8 billion of deposits and 39 branches -- fell far short of the expectations of his office and of community bankers in the state. He vowed to push Fleet to offer more.
"We are hoping for more branches and assets -- significantly more -- and the consideration of community and regional banks," Mr. Blumenthal said in a telephone interview Friday. He was not specific about how many more branches would satisfy his demands.
A spokesman for Fleet declined to comment. The 39 branches on the Connecticut list exceed the 33 branches and $1.5 billion of deposits that Fleet proposed for sale in the merger application that it filed in May.
An antitrust suit is among the remedies Mr. Blumenthal said he would consider, though he said he would not take any action until after the Federal Reserve Board weighs in on the proposal.
"We are considering all of the available options," he said. "We will continue to work with the Fed, and we will continue discussions with the company."
The Fed has scheduled for today its vote on Fleet's application to buy BankBoston.
In a letter Thursday, Mr. Blumenthal and Connecticut Treasurer Denise L. Nappier asked the Fed to postpone today's meeting and extend the public comment period so that transcripts of a public hearing held in Hartford last month could be entered into the record. At that hearing, "comments focused on the merger's severe anti-competitive impact," the letter said.
A spokesman for the state treasurer said the Fed had agreed to include that transcript in the public record -- but then quickly changed its mind.
A spokesman for the Fed in Washington said it had not received any communication from Connecticut officials and that the hearing was still on.
A lawsuit filed by Mr. Blumenthal could trip up what is widely perceived as a done deal. Fleet and BankBoston plan to complete the merger transaction early in the fourth quarter. Shareholders approved it last month.
In approving the divestiture plan, the Justice Department essentially gives its clearance, meaning there is no hazard of an antitrust suit because of diminished competition. Public officials in other New England states had muted reactions. Massachusetts Attorney General Tom Reilly was satisfied with the plan, a spokesman said. Rhode Island Attorney General Sheldon Whitehouse had no comment.
Most of the total package of $13.2 billion of deposits and 306 branches will go to one buyer, which according to knowledgeable sources is $25 billion-asset Sovereign Bancorp of Wyomissing, Pa. The minority portion was reportedly earmarked for Massachusetts community banks.
Sovereign is considered strong in consumer services but weaker in commercial lending and fee-based services. Mr. Blumenthal and bankers in Connecticut said they were most concerned that the combined Fleet Boston Corp. would stamp out competition in commercial lending. "We do not think the divestiture plan involves a buyer that would provide competition," Mr. Blumenthal said.