Some analysts are asking themselves whether Boston-based Fleet Financial Group Inc. hasn't bitten off more than it can chew.

In two bold moves, Fleet last year acquired $36 billion-asset Shawmut National Corp. for $3.7 billion and, in a separate deal, agreed to acquire Jersey-City based National Westminster Bancorp. for $3.6 billion. Natwest has $30 billion of assets.

Together, these acquisitions would consolidate Fleet's market position in New England and extend its geographical franchise into the New York City metropolitan area. They also boost Fleet's total assets to about $90 billion, after divestitures, from slightly more than $51 billion.

But analysts said Fleet has its work cut out for it to integrate the two operations.

"The jury's still out," said Thomas F. Theurkauf Jr., a bank analyst at Keefe, Bruyette & Woods Inc. "There's still an enormous challenge, and this is the year Fleet will have to make things happen."

Some analysts frankly admit they are unwilling to venture a definite forecast of how the mergers will pan out, given remaining uncertainties about how fast Fleet will be able to realize operational savings.

"It's extremely hard to formulate an accurate model for this company right now, simply because the outlook is changing and the company is loath to give guidance due to some past predictions which haven't quite panned out," Nancy Bush, a banking analyst at Brown Brothers, Harriman & Co. wrote in a recent report. "In any instance, we feel we've got to give some indication that the first quarter will be a very weak one."

However, analysts are quick to emphasize that Fleet, a veteran acquirer, has long experience in consolidating operations.

As soon as Fleet achieves the cost savings inherent in the two deals, it stands to benefit from a broader range of products and a larger number of customers.

"They didn't have to pay a large premium to buy Natwest," noted Lawrence R. Vitale, an analyst at Bear, Stearns & Co. "In simplest terms, in financial terms, what they gain is an opportunity to run that franchise better than it's been run in the past."

Analysts also noted that shrinking the combined balance sheet would also give Fleet more room to maneuver and help boost its return on assets.

"It's central to the issue because it does buy them some flexibility in case they run into operational difficulties," said Mr. Vitale.

Fleet's first objective is to integrate systems already in place at the two other banks. It also needs to restructure itself to incorporate bigger wholesale corporate banking operations and areas such as trade finance with which it has only limited experience.

Last, but not least, Fleet will also need to retain good relations with corporate customers and consumers, some of whom have seen their banks change hands a few too many times in recent years.

Some analysts say this last part may be the most crucial.

"The bigger question is account retention and revenue performance," said Mr. Theurkauf. "That will be the big challenge."

Jay Sarles, vice chairman at Fleet, said the bank should complete its integration with Shawmut by the end of this summer and with National Westminster by June 1997.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.