A threat by Connecticut Gov. John Rowland to block the Fleet-Shawmut merger smacks of politics and won't hamper the deal, industry observers said last week.
The Republican governor complained, after the $3.7 billion acquisition of Shawmut National Corp. by Fleet Financial Group was announced last Tuesday, that more than 1,000 of his constituents would lose their jobs.
Fleet, which is based in Providence, R.I., and has branch overlaps with Shawmut in Connecticut and other states, said it would reduce its total employment of 31,000 by 4,500, including 3,000 layoffs. The company did not detail where cuts would be made.
If the merger gets necessary regulatory approvals, Fleet would emerge as the ninth-largest U.S. bank, with $81 billion of assets.
Frank Barkocy, an analyst at Advest Group who covers Fleet, said he had never heard of a governor intervening to block a bank merger. Mr. Barkocy interpreted Gov. Rowland's threat as "political posturing."
The governor could slow or otherwise influence his state banking department's approval process. Officials in the department were not available to comment.
"Fleet is by no way abandoning Connecticut," Mr. Barkocy said. The state's capital city, Hartford - one of Shawmut's dual headquarters cities, along with Boston, where the new Fleet will be based - "will still be a business center for them," the analyst said.
Gov. Rowland himself proposed two weeks ago a budget that would cut 2,500 state employees, out of a work force of 50,000, through layoffs.
Officials at Shawmut and Fleet could not be reached for comment, but Fleet spokesman Tom Lavelle said the top executives at both institutions had met and will continue to meet with Mr. Rowland.
"We've had a good exchange with the governor," Mr. Lavelle said. "We'll obviously continue to work with him."
To forestall federal antitrust objections, the banks said they would divest $3 billion of deposits. The Connecticut attorney general, Richard Blumenthal, a Democrat, said he would do an antitrust investigation.
Governors from the other northeastern states where Fleet and Shawmut operate have not complained about the merger. Even community activist Bruce Marks, executive director of the Union Neighborhood Assistance Corp. in Boston, said he wouldn't protest on Community Reinvestment Act grounds.
"Their individual lending records to low- and moderate-income families in the past year are pretty good," he said. "The question is whether the combined institutions will accelerate that commitment."
