It's been a long four months for Merrill Sherman and Malcolm "Kim" Chace 3rd. But it all paid off last week when they announced plans for the largest banking start-up in New England history.
After intense last-minute negotiating, the banking attorney and the Providence investor led an informal group of Rhode Island private and corporate investors that snatched up 13 branches and almost $500 million in deposits divested in the state by Fleet Financial Group Inc.
Providence-based Fleet sold the branches to satisfy the Justice Department's antitrust concerns about its pending merger with Shawmut National Corp.
The group, which still needs enough private and institutional investors to raise $50 million in capital to support the deposits, plans to launch a new state-chartered bank in the first quarter of 1996.
Immediately, it will become the second-largest independent bank in Rhode Island, behind Westerly-based Washington Trust Bancorp. With $540 million of assets, the new bank becomes a competitor to Fleet and Bank of Boston right in Providence.
"There is a need for a good community bank in this part of Rhode Island," Mr. Chace said. "There are three giant regionals (Fleet, Shawmut, and Bank of Boston) that do most of the business, and there are a couple of community banks in other parts of the state that do a good niche business and I think we can do the same thing in the Providence-Warwick area."
But their efforts nearly came to naught. The group appeared to have lost the bidding until Fleet chairman Terrance Murray urged his negotiators to let it make another offer. "He saw the possibility of a community bank in Rhode Island being a real positive for the state," said a source familiar with negotiations.
"Fleet in this divestiture has made a genuine effort to work with us in order to make this transaction possible, and we're very grateful," Ms. Sherman said in an interview. "Terry Murray's personal efforts made the difference in this deal."
The start-up operation, still needing federal and state regulatory approval, is the second-largest case of an investor group buying a group of divested branches in the nation. In 1992, following its merger with Security Pacific Corp., …