Lawrence K. Fish, the chairman and chief executive officer of Citizens Financial Group, says it is his firm belief that a company must control its destiny.

That, he says, is why Citizens, of Providence, R.I., did not bid on any of the branches and deposits divested in the merger of Fleet Financial Group and BankBoston Corp. last year. And it is also why Mr. Fish was one of the early and most vocal supporters on the board of Citizens' parent company, Royal Bank of Scotland, for the hostile and ultimately successful bid to take over National Westminster PLC.

"When something is compelling and strategic, you can almost not afford not to do it," he says.

Mr. Fish, 55, has built Citizens through nearly a decade of acquisitions. It had $4.4 billion of assets when he took the helm in 1992 and has about $29.3 billion now.

Sitting out the auction of the Fleet and BankBoston castoffs, however, has let Sovereign Bancorp, a virtual unknown in New England, become the No. 3 bank in the region, nipping at Citizens' heels.

This is not something the soft-spoken but fiercely competitive Mr. Fish is likely to tolerate for long. Though he emphasizes that Citizens will spend the rest of the year integrating its two most recent purchases - State Street's commercial banking business and $5.9 billion-asset UST Corp. - it's a good bet the company will make another big deal in early 2001.

"The Natwest transaction will presumably give Larry Fish deeper pockets to draw on for acquisitions, more likely in New England than outside," says James Ackor, vice president of equity research at Tucker Anthony Cleary Gull in Portland, Maine.

While he completes his current deals, Mr. Fish has a chance contemplate his next one, which may well be his biggest ever.

"We're a growth company. I expect we'll continue to grow," he said in a recent interview in his spacious office overlooking Boston Harbor.

Any companies it buys would probably be fairly traditional banking businesses in New England. "We're very focused on our markets," Mr. Fish says.

His plan is to position Citizens as the real "bank bank" in New England, as opposed to FleetBoston, which he considers a multistate financial services conglomerate. Sovereign, based in Wyomissing, Pa., is considered essentially a mortgage-dominated thrift.

"We're not a global bank, or a processing bank, or an investment bank," Mr. Fish says. "We do retail and small- and middle-market banking. We do cash management, leasing, some venture capital, government and international banking.

"It's a little boring," he continues, "but we're not a public company. I'm under no pressure to announce an e-banking strategy. I have to produce a reliable and growing earnings stream. We have no plans to be in financial services. We're a bank."

A year ago, when Fleet and BankBoston announced their intention to merge, New England's banking community - Mr. Fish included - greeted the news with a sense of urgency. The deal would create the region's biggest player by far, and regulators were certain to require Fleet to make a massive divestiture of deposits.

Here "was a really cosmic event for our company," Mr. Fish says. "It required a thoughtful but quick response."

Surrounded by the Pacific Ocean and scores of deep-sea turtles - he was on vacation in the Galapagos Islands with his wife, Atsuko, and their three children when the megamerger deal was announced - Mr. Fish hatched his plan to make a large acquisition in New England.

As it turned out, that big deal was Citizens' purchase of UST Corp., a Boston bank. Neal Finnegan, UST's chairman, had been a top executive at the old Shawmut National Corp. and a New England banker for decades. He had worked with Mr. Fish for 20 years ago to create the Yankee 24 automated teller machine system, which was one of New England's largest ATM networks until it was taken over by NYCE in 1994.

Mr. Fish figured Mr. Finnegan would see a Citizens-UST merger as the ideal countermove to the Fleet-BankBoston combination. He figured right.

Citizens "did not want to be held captive to the BankBoston-Fleet divestiture process," Mr. Fish recalls. "If we didn't win it, our fate would be sealed." And, the thinking went, even if Citizens did succeed at the auction, Fleet would go out of its way to make the sale expensive and difficult.

"We were thoughtful about the implementation risk," Mr. Fish says. "It would never be in the seller's interest to make the process seamless."

Mr. Finnegan was concerned, too, that his company would have a tough go of it if UST tried to participate in the Fleet-BankBoston selloff. He also feared such a deal would hurt UST's capital position - precisely what ended up happening to Sovereign, which eventually won the divestiture bid.

But even before Mr. Fish had a chance to leave the Galapagos and initiate discussions with UST, Marshall Carter, the chairman of State Street Corp., was on the phone asking if Citizens was still interested in buying his commercial banking business.

Mr. Fish, who had been trying to buy the bank within the processing company for five years, was thrilled. "Marsh Carter's message was, 'This Fleet-BankBoston event forces our thinking. If you can do a due diligence that's prompt and pay a fair price, we'd like to conclude a deal in two months.' "

Together, the UST and State Street deals made Citizens a strong No. 2 in eastern Massachusetts. It was already No. 1 in Rhode Island and tied for first place in New Hampshire.

Normally, this would have been just the beginning for Mr. Fish, who has completed 16 acquisitions at Citizens. But then Royal Bank asked him to participate in meetings and conference calls about the National Westminster takeover.

Mr. Fish's "deep merger experience" gave Royal Bank an edge in its faceoff with Bank of Scotland, says Neil Baker, head of European bank research at Dresdner Kleinwort Benson.

Mr. Fish sees his role in those negotiations in much the same way. Citizens' track record "gave Royal a huge advantage," he says. "The perception was that if any bank could get their arms around the conversion and integration issues, it was Royal.

"I was able to be one of the voices driving the transaction. I believed in it. The Royal was taking over a bank twice its size. It was Edinburgh coming to The City. It was the Scots taking over the English."

Mr. Fish was raised in Winnetka, Ill., where his father owned a small novelty and party-favors store and his mother was a social worker. He attended Drake University and Harvard Business School, getting his MBA in 1968. Influenced by the social upheaval of the times, he spent his first year out of Harvard studying meditation and traveling through India. Then he went to work for the U.S. Agency for International Development in Brazil before finding his way to Bank of Boston in 1972.

For 15 long years Mr. Fish climbed the ranks at New England's Brahmin bank, working in Japan - where he met his wife, a former TV sports producer - and in Latin America, where he recruited Henrique de Campos Meirelles, who is now Fleet's president of global banking and financial services.

He came home to run Bank of Boston's domestic retail division and aspired to the top spot at the company, but a colleague, Ira Stepanian, got the job. Disappointed, Mr. Fish left Bank of Boston and spent several years mucking around with two institutions that ended up in the hands of regulators: the notorious Columbia Savings & Loan Association of Beverly Hills and Bank of New England.

But four years after Royal Bank bought Citizens, a former mutual company that had gone public in 1986, Mr. Fish was hired as chairman and CEO. It was like coming home.

"Citizens is very much a Larry Fish creation," says an analyst who asked not to be named. "He has imposed his own vision on the bank and driven it. No foreign bank can match the track record of Royal in the U.S."

The analyst says Mr. Fish. is "very well paid ¬Öespecially in the U.K. context."

Mr. Fish's compensation last year was nearly $2 million. His boss at that time, Sir George Mathewson, now executive deputy chairman of Royal Bank Group, pulled down about $550,000.

Royal Bank appears to have blessed Mr. Fish's expansionist strategy in the United States, giving him broad autonomy. Royal, in turn, has appreciated the tidy profits that Citizens has contributed. Some analysts say the time might be right for Royal to sell Citizens to help pay for the $33.2 billion Natwest deal.

Though Citizens brought in 23% of the company's $1.9 billion in pretax profits last year, that portion will slip to approximately 10% this year with Natwest added in. Mr. Fish acknowledges that Citizens,- which Royal bought for a mere $450 million in 1988, is "now worth billions."

Citizens' pretax return on equity of 30% in 1999 has historically been higher, while Royal Bank as a whole had return on equity of than 32% last year, according to Alexander Potter, European-banks analyst at Commerzbank Securities. "Citizens wasn't as profitable as the rest of the group put together," he says. "The exchange rate, with the pound strengthening, has worked against it. It's difficult to know how core it is."

Royal's top management has maintained publicly that it will hold on to Citizens. And Dresdner Kleinwort Benson's Mr. Baker says that, "with retail bank valuations coming down, it's not a good time to sell anyway."

Mr. Fish says Citizens will not be sold. "This is a stable place. We found our partner and the Royal has been brilliant."

James Moynihan, a senior vice president at Advest Group in Hartford, Conn., says that, assuming Royal Bank wants to maintain a U.S. presence, Mr. Fish and Citizens are safe for now.

"I think Fish would love to continue running that bank for another 10 years," Mr. Moynihan says. "We might see Royal Bank spin it off in five, because they could get a nice price for it and Larry Fish could make a nice estate for himself. Maybe they go public in five years and Larry retires in 10."

Because Citizens is so closely identified with Mr. Fish, the issue of succession will have to be addressed, analysts say. But that time apparently is a long way off, because Mr. Fish says he isn't thinking about retiring.

"I'm very energized by what I'm doing," he says. "It's more exciting than ever." And he adds, "We're always grooming successors."

Mr. Fish contends that Citizens has benefited from an influx of former Fleet and BankBoston customers whose accounts were sold to Sovereign. His rival, John P. Hamill, chairman and CEO of Sovereign Bank New England, says that is absolutely not true. Surveys by Sovereign found that 80% of the bank's high-end customers (those with accounts of more than $10,000) are happy with the conversion, Mr. Hamill says.

"That satisfaction rate is only going to get higher," he adds. "We studied opinion in the first two or three weeks of conversion, when things were at their worst. We're very pleased with the way things have gone. If another bank gets a few accounts, they think it's a landmark event. We're going to match up very well against Citizens."

Mr. Fish says he will continue to focus on winning the smaller commercial accounts that don't interest Fleet. Some analysts speculate that Citizens will next go after a smaller Massachusetts thrift, such as $1.2 billion-asset Medford Savings Bank or $1.9 billion-asset Seacoast Financial Corp. of New Bedford. Mr. Ackor of Tucker Anthony, however, says the best match for Citizens would be Peoples Heritage Financial Group in his company's hometown of Portland.

Mr. Fish said he would not comment on any specific deals.

Peoples has $18 billion of assets and branches in New Hampshire, Vermont, western Massachusetts, and Maine. Citizens and Peoples Heritage are "both mid-tier banks with a community banking philosophy," Mr. Ackor says. "They both have a service orientation. They have a very good fit geographically. The deal almost makes too much sense."

Merging with Peoples Heritage would give Citizens roughly $48 billion of assets, $30 billion of deposits, and 11% regional deposit market share. It would also make Citizens an even more formidable challenger to Fleet, and that's what Larry Fish wants.

Fleet is No. 1, but, "We want to be the clear and dominant No. 2 bank in New England," he says.

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