A Close Look at Who Wins When Banks Go A-Courting

By David R. Francis Columnist | The Christian Science Monitor, November 3, 2003 | Go to article overview

A Close Look at Who Wins When Banks Go A-Courting


David R. Francis Columnist, The Christian Science Monitor


OK, another bank buyout: big numbers that rumble on Wall Street, promises of efficiency and nationwide reach. But beyond the rhetoric and investment buzz, another story emerges.

As Bank of America plans to take over Fleet Bank - the third largest bank merger in United States history - there is renewed concern with the gradual concentration of power and influence in the banking industry.

To begin with, the buyout is mostly a nuisance for the thousands of people who bank at Fleet. Many have already suffered through bank changes in earlier mergers.

"There's no redeeming value for consumers whatsoever," says consumer advocate Ralph Nader. He sees no new consumer services, no reduction in bank fees - just more absentee ownership for New Englanders.

Of course, you might expect him to say that. But experts point to studies that demonstrate that bigger does not necessarily mean better. Mid-size banks (between $1 billion and $10 billion in assets) have a higher "efficiency ratio" than bigger or smaller banks, according to data from SNL Financial in Charlottesville, Va. That means they pay a smaller share in expenses to generate a dollar of income.

"Smaller banks are able to compete very effectively with bigger institutions," says Christopher James, a finance professor at the University of Florida, Gainesville. That's so at least in areas of most concern to ordinary consumers.

So if the deal isn't about efficiency, what's all the hoopla about?

Bank of America, by paying $43 billion (at time of the announcement) to take over Fleet, will become a truly national bank. That was not possible until passage of the Banking Act of 1999.

It will become the nation's second-largest bank (after Citigroup). It will have branches in most states with a total 9.8 percent share of deposits in the US, according to SNL Financial. By law, BofA cannot make another acquisition that would push its share over 10 percent. It can, though, exceed that percentage by internal growth.

Wall Street has been focused on the financial aspects of the deal. Shareholders of Fleet Bank stand to do extremely well. They will get BofA stock worth perhaps 30 percent or more than their Fleet shares, depending on the value of BofA shares if the deal wins approval of regulators and is completed.

As a result, the top executives and directors of Fleet, with sizable holdings of their bank's stock, also stand to benefit hugely. An analysis by the Boston Herald finds that FleetBoston Financial Corp. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

A Close Look at Who Wins When Banks Go A-Courting
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.