Order Approving the Merger of Bank Holding Companies
Fleet Financial Group, Inc. ("Fleet"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. [sections] 1842) to merge with BankBoston Corporation ("BankBoston") and thereby acquire BankBoston's subsidiary banks, including its lead subsidiary bank, BankBoston, N.A., Boston, Massachusetts.(1) Fleet also has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. [sections] 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire the domestic nonbanking subsidiaries of BankBoston.(2) In addition, Fleet has filed applications and notices under section 4(c)(13) of the BHC Act (12 U.S.C. [sections] 1843(c)(13)), sections 25 and 25A of the Federal Reserve Act (12 U.S.C. [subsections] 601 et seq. and 611 et seq.), and the Board's Regulation K (12 C.F.R. 211) to acquire the foreign operations and Edge Act subsidiaries of BankBoston.(3)
Fleet, with total consolidated assets of approximately $104.4 billion, is the ninth largest commercial banking organization in the United States, controlling approximately 2.5 percent of total banking assets of insured commercial banks in the United States ("total banking assets").(4) Fleet operates depository institutions in Connecticut, Florida, Maine, Massachusetts, New Hampshire, New Jersey, New York, and Rhode Island. Fleet also engages in a broad range of permissible nonbanking activities nationwide.
BankBoston, with total consolidated assets of approximately $73.5 billion, is the 15th largest commercial banking organization in the United States, controlling approximately 1 percent of total banking assets. BankBoston operates subsidiary banks in Connecticut, Florida, Maine, Massachusetts, New Hampshire, and Rhode Island. BankBoston also engages nationwide in numerous permissible nonbanking activities.
As discussed more fully below, Fleet has proposed to divest branches controlling more than $13 billion in deposits and associated assets in connection with the proposal to address the potential effects of the proposal on competition in various markets in Massachusetts, Connecticut, and Rhode Island. After accounting for the proposed divestitures, the proposal would create a combined organization that would be the eighth largest commercial banking organization in the United States, with total consolidated assets of approximately $164.9 billion, representing approximately 3.5 percent of total banking assets. The combined organization would operate under the name Fleet Boston Corporation ("Fleet Boston"), and would have a significant presence in the northeastern United States.
Factors Governing Board Review of the Transaction
The BHC Act enumerates the factors the Board must consider when reviewing the merger of bank holding companies or the acquisition of banks. These factors are the competitive effects of the proposal in the relevant geographic markets; the financial and managerial resources and future prospects of the companies and banks involved in the transaction; the convenience and needs of the communities to be served, including the records of performance under the Community Reinvestment Act (12 U.S.C. [sections] 2901 et seq.) ("CRA") of the insured depository institutions involved in the transaction; and the availability of information needed to determine and enforce compliance with the BHC Act.(5) In cases involving interstate bank acquisitions, the Board also must consider the concentration of deposits nationwide and in certain individual states on consummation of the proposal, as well as compliance with other provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-Neal Act").(6)
Public Comment on the Proposal
To give interested members of the public an opportunity to submit comments to the Board on the statutory factors that it is charged with reviewing, the Board published notice of the proposal and provided a period of time for public comment. …