Fleet Financial Group's acquisition of Shawmut National Corp. will markedly increase Fleet's formidable presence in mortgage banking.
Fleet has been on a buying spree in home lending. In addition to the Shawmut deal, Fleet is planning to buy California's Plaza Home Mortgage Corp. and the publicly held portion of Fleet Mortgage Corp.
When the mortgage banking units of Fleet and Shawmut are melded, they will service nearly $100 billion of loans, ranking No. 2 in the field. Fleet now is the nation's fourth-largest servicer.
The combined mortgage production units, meanwhile, should be capable of generating about $15 billion of loans nationwide.
The deal will easily make the Fleet the largest mortgage lender in New England, where both Fleet and Shawmut long have been major players. Fleet has been headquartered in Providence, R.I.; Shawmut has maintained dual headquarters, in Hartford, Conn., and Boston.
"They are going to be a huge factor, and they will certainly have size on their side," said Christopher Dunn, senior vice president at Cambridgeport Savings Bank, Cambridge, Mass.
Taken together, the two companies originated 4.61% of all mortgages in Rhode Island, Massachusetts, and Connecticut - more than double the share of their nearest competitor, according to TRW REDI Property Data, a Riverside, Calif.-based information company.
Michael Zucchini, Fleet's vice chairman and head of national consumer businesses, will oversee the mortgage operations.
Fleet expects that about 3,000 jobs will be cut as a result of the merger. Mortgage banking is sure to have its share - especially in markets where Fleet and Shawmut overlap.
At the end of 1994, Fleet Mortgage and Shawmut Mortgage had a total of about 3,900 employees. That is about 500 more than Countrywide Credit Industries, the No. 1 lender and servicer, has for a somewhat larger business.
The merger will also create a formidable home equity lending operation, especially in New England. According to SMR Research Inc., a Budd Lake, N.J., consultancy, the new Fleet Financial will be the fifth-largest home equity lender in the nation.
As of last June 30, Fleet held $4.1 billion of outstanding home equity loans; Shawmut, $2 billion. Together, they will account for about 20% of the home equity market in Massachusetts alone, said George R. Yacik, an SMR vice president.
Jonathan S. Hornblass contributed to this article.