Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel One
19 MR. MURRAY: Thank you. I'd like to begin
20 by thanking the Federal Reserve Board for inviting
21 me to speak on behalf of Fleet on our proposed
22 merger. Since the months since we announced our
23 proposal, it has been a very proud and challenging
24 time for all of us at Fleet and Bank of Boston. I
25 would particularly like to thank our employees, many
0016
1 of whom have been working very hard this summer to
2 ensure that our company gets off on the right foot.
3 I know there are many questions and
4 concerns about this merger and we hope to address
5 them today. All of us, employees and citizens
6 alike, are on the verge of ensuring that New England
7 will enter the 21st century with a hometown bank,
8 headquartered in this city, committed to serving our
9 customers and our community.
10 Four years ago when I testified before this
11 Board about Fleet's merger with Shawmut, I spoke
12 about the banking industry's trend towards
13 consolidation and how it affected our relations with
14 our customers and our communities. Chad talked
15 about the same issues when it came time to discuss
16 BankBoston's merger with BayBanks. We took steps
17 then to keep our institutions strong and
18 independent. Neither of us expected to be here
19 today talking about a merger between our banks, but
20 we recognize that this merger is another necessary
21 step to ensure that New England continues to have a
22 major locally-based banking presence.
23 In the past few years we've seen a number
24 of bank megamergers like NationsBank and Bank
25 America, First Chicago and Bank One. The number of
0017
1 commercial banks in the U.S. decreased by a third
2 between 1987 and 1997. The number of bank branches
3 increased by a third over the same period, as fewer
4 banks worked to expand access to service.
5 We've seen consolidation spill across
6 national borders as Deutsche Bank acquired Bankers
7 Trust, and we've seen it in France with Banque
8 Nationale de Paris' attempt to take over Sogen
9 Paribas to create a bank with a trillion dollars in
10 assets.
11 Already in Europe there are far fewer banks
12 than in the U.S., possessing far greater assets and
13 ability with which to compete in the global
14 financial markets. In the U.S. we've also seen
15 interindustry mergers between Citicorp and
16 Travelers, and E-trade and Telebank, as new
17 technologies help to break down archaic barriers
18 between banking and other financial service
19 providers.
20 By increasing in size, banks achieve
21 economies of scale that allow us to invest more in
22 technology and in people so that we can develop
23 superior products and services like banking,
24 brokerage and investment services. With products
25 such as these, we can match the increasingly
0018
1 sophisticated needs of both the businesses and
2 consumers we serve.
3 Our merger also addresses the challenges
4 offered by new kinds of competitors. We no longer
5 compete with just other banks. We now compete with
6 institutions such as Fidelity, Merrill Lynch and
7 more recently with on-line banks. More importantly,
8 this is a merger that seeks to strengthen our
9 national and international competitiveness while
10 making a deep local commitment.
11 Fleet-Boston brings together two of
12 America's oldest and most prestigious banks to
13 create one of the world's premier financial
14 institutions and financial providers right here in
15 the City of Boston.
16 When we announced the merger in mid-March,
17 our slides used the tag line, "One Plus One Equals
18 Greater Than Two." This slide illustrated the idea
19 that our combined institution could do more in total
20 for our customers, communities and stockholders than
21 what the two premerger banks have done separately.
22 This was not a statistical assertion, but rather a
23 broad statement about how the new bank's synergies
24 would make Fleet-Boston more competitive than either
25 bank would be by itself. The merger would enhance
0019
1 our geographic diversification and our role as the
2 premier financial service provider from Bangor to
3 Brazil and from Cape May to Cape Cod.
4 This diversification will help reduce our
5 vulnerability to economic downturns. Those of us
6 who went through the regional banking crisis of the
7 early '90s understand how important both geographic
8 and operating diversity are, and we don't want to be
9 at risk in the event of another economic downturn in
10 a particular region or industry sector.
11 This is indeed a very important time for
12 all of us who live in New England. It is the time
13 for us to secure our economic future by responding
14 to the competitive challenge raised by world-wide
15 banking financial services, consolidation and
16 mergers.
17 While there are many opportunities and
18 benefits to this merger, at the same time there are
19 many concerns being voiced, and I'd like to address
20 them right now.
21 One of the compelling reasons for this
22 merger and why we know it will work is that each
23 company brings certain strengths to the table.
24 Right from the beginning Chad and I understood that
25 we must leverage the advantages of each company. In
0020
1 that spirit we will have BankBoston lead the way in
2 the area of community development. They've done a
3 great job in this area for which they have been
4 rightly recognized.
5 Maintaining our outstanding CRA ratings
6 will continue to be a corporate goal for
7 Fleet-Boston. We will use the BankBoston community
8 development approach, including First Community Bank
9 and the BankBoston Development Corporation.
10 Together we look forward to setting a new standard
11 of community development.
12 We have an outstanding CRA rating in
13 Massachusetts. We have enormous successes and
14 successful partnerships that have worked to create
15 thousands of new homeowners that have invigorated
16 communities. Moving forward, we plan to continue
17 these efforts.
18 We will also sustain our support of
19 neighborhood-oriented banking services, community
20 development programs and the charitable giving that
21 makes this commitment a reality.
22 Gail will speak about these initiatives in
23 detail, but I wanted to state that we strongly
24 believe that our recently announced commitment of
25 14.6 billion dollars is a realistic and achievable
0021
1 plan and one that will increase affordable housing,
2 strengthen small business, and stabilize
3 neighborhoods in our footprint.
4 Moving forward with the new commitment,
5 we'll have an oversight board that will measure our
6 progress in serving community needs, a board with
7 representatives from many of the 125 community
8 groups we consulted when developing this plan.
9 Addressing antitrust concerns, it is
10 important to realize that the proposed merger is
11 more about combining the complementary businesses of
12 Fleet and BankBoston and not about combining
13 competing businesses. In this regard Fleet's retail
14 branch operations extend to many Northeastern states
15 in which BankBoston has no branches, whereas,
16 BankBoston's large corporate banking business
17 extends across the nation, in 23 foreign countries
18 where Fleet has no presence.
19 The merger will also bring together
20 complementary nonbanking lines of businesses such as
21 Fleet's Quick & Reilly retail brokerage franchise
22 and BankBoston's Robertson Stephens, an investment
23 banking business. Where the two banks do overlap,
24 we have proposed a divestiture plan that was
25 intended to preempt any conceivable competitive
0022
1 concerns. With more than 290 branches and
2 approximately 12-1/2 billion dollars in deposits,
3 the proposed divestitures are far and away the
4 largest ever made in the history of U.S. bank
5 mergers. As a stand-alone entity, the divestiture
6 would rank among the top 50 bank holding companies
7 in the nation in terms of small business loans and
8 total assets.
9 Chad and I both grew up with banks
10 headquartered here in our home region, banks managed
11 by people who cared about New England and its
12 people. I don't want my children or my
13 grandchildren living in a New England whose economic
14 fate is dictated from outside the region. I want
15 them to have local institutions that are strong and
16 sophisticated, but that make decisions locally with
17 New Englanders in mind. So many American cities
18 have lost that. There's no longer a major
19 indigenous bank in Los Angeles, none in Miami,
20 Denver, Dallas, Philadelphia or Houston.
21 Panelists, I mentioned at the outset how
22 excited all of us at Fleet and BankBoston are about
23 this merger. I'd like to finish by telling you how
24 much this merger means to me personally. I grew up
25 in New England, went to school here, and I've worked
0023
1 in banking here for almost four decades. This is my
2 home and this is home to Fleet and BankBoston and
3 our tens of thousands of dedicated employees. Our
4 legacy will be a large global institution domiciled
5 in New England with deep community commitments.
6 The financial system that is now taking
7 shape in which the Federal Reserve Board has done so
8 much to make possible is one that reflects the
9 vision and innovation that has made our nation the
10 world's financial leader.
11 I'm also pleased that the House of
12 Representatives last week passed the Financial
13 Services Act of 1999. With the House and Senate
14 both voting to appeal the outdated Glass-Steagal
15 Act, we're a step closer to ensuring that this
16 nation's financial institutions can thrive and
17 compete in the next century.
18 Thank you for the opportunity to speak, and
19 let me also thank the concerned citizens of all
20 viewpoints who cared enough to join us today and
21 share their thoughts.
22 PRESIDING OFFICER SMITH: Thank you. I'd
23 like to remind witnesses that they can submit their
24 full written statement for the record, so that to
25 the extent you can abbreviate your comments, that
0024
1 would be helpful and help us stay within the
2 allotted time for the panel.
3 Mr. Gifford?
4 MR. GIFFORD: That's one heck of an
5 introduction. Thank you. I'll move quickly in my
6 mind. But thank you, Terry. Thanks all for
7 participating with us. I, too, welcome this
8 opportunity to discuss some of the reasons behind
9 and benefits of BankBoston's proposed merger with
10 Fleet. I feel strongly, strongly that this merger
11 is in the best interests of all our stakeholders,
12 our employees, our customers, our communities, not
13 just shareholders. I do not want to pick out any
14 one of those as being more important than any other,
15 but it's no secret -- and we said this in March when
16 we announced it -- the opportunity to preserve a
17 financial service powerhouse in New England was
18 important, and you heard Terry comment on that. I
19 clearly share his passion for preserving the
20 hometown banks in the region, serving the individual
21 cities and communities that make up this great
22 fabric.
23 I, too, am a New Englander. I'm a son of a
24 former New England bank chairman, so the importance
25 of a strong, locally-based banking organization has
0025
1 been with me for a long, long time, and surely, as
2 Terry also referenced, all of us learned a very
3 painful lesson about the importance of a strong
4 banking organization about a decade ago.
5 As Terry has described, the consolidation
6 and convergence are the hallmarks, the realities of
7 financial services today. BankBoston is no stranger
8 to that tradition, having participated in the
9 purchase of BayBanks in '95, Robertson Stephens, an
10 investment bank, in 1998 as part of a continued
11 consolidation in convergence of financial services.
12 I'm moving faster now, Madam Chairwoman.
13 But our proposed merger is not just about size and
14 strength, of course, but quality and commitment.
15 Our first principle from our first conversation has
16 been to preserve the best of Fleet and the best of
17 BankBoston, to build a new company that leverages on
18 respective strengths as well as honors and reaffirms
19 our shared commitments.
20 We will take the best talent and best
21 practices and make them one of everyday standards
22 and go on to build one of the premier financial
23 service organizations in the world and surely one
24 this region will be proud of.
25 The new Fleet-Boston will be one of the top
0026
1 two employers in the region. After the merger,
2 divestitures and consolidations, we will employ some
3 25,000 New Englanders and infuse into this company
4 no less than a billion-five in purchasing power and
5 tax dollars.
6 Acknowledging the painful impact of job
7 loss on some employees, we have pledged to treat
8 affected employees fairly and compassionately. We
9 will provide a generous severance program and a
10 cutting-edge transition assistance program of
11 support for career retraining, starting a business,
12 or doing bank-subsidized community work. At the
13 same time, and I think very importantly, we envision
14 career opportunities for tens of thousands of local
15 residents in a dynamic growth company.
16 The new Fleet-Boston will be a leader in
17 many markets around the world, able to meet the full
18 financial service needs of consumers, businesses of
19 all sizes, large and small, public sector entities
20 and nonprofit organizations. We will be the premier
21 banking franchise in the Northeast, serving eight
22 million households through nearly 6,000 branches and
23 ATMs. Nationwide the new company will serve more
24 than 20 million consumers and will have 450,000
25 small business customers and more than 100 billion
0027
1 dollars in assets under management.
2 When our wholesale banking capabilities are
3 combined, the results will be equally valuable for
4 commercial customers. We're talking about a bank in
5 CNI lending in the top three, the number one bank in
6 commercial field, premier investment bank, top five
7 in cash management provider, the top tier leader in
8 private equity, a strong company based here in
9 Boston.
10 BankBoston's unique Latin America
11 franchise, formed more than 80 years ago, of the
12 commercial needs of New England merchants will
13 continue to put Boston on the world map, helping to
14 forge links between businesses and nations in our
15 hemisphere. The new Fleet-Boston will be able to
16 leverage this connection even further.
17 Finally, Fleet-Boston will have the
18 resources that Terry also referenced to be a major
19 player in E-banking, leveraging, for example,
20 BankBoston's base of a half million on-line banking
21 customers and Fleet's quarter million electronic
22 sure trade customers, again assuring that Boston
23 will participate in this very important growth
24 industry.
25 In short, a local financial service
0028
1 company, competitive across the country and around
2 the world, will be a valuable asset to individuals
3 and communities and an invaluable partner to New
4 England businesses seeking to operate in today's and
5 tomorrow's global economy.
6 But again, this is not about size alone.
7 It's ironic, just as we're on the verge of an
8 industry that will conduct more and more of its
9 business electronically, without walls and without
10 boundaries, without bricks and mortar, without paper
11 or passbooks. Our determination also to be grounded
12 in our local communities is greater than ever.
13 For me, this merger would not be effective,
14 would not be right if we were only able to build a
15 powerful regional, national, global business, if we
16 were only a large and strong employer, and if we
17 left behind the communities that have nurtured both
18 companies for a few centuries. As we are poised to
19 become one of the leading financial institutions, we
20 have also pledged to remain a local partner and one
21 that will -- he took all the time. (Laughter) I'm
22 not sure how the system works.
23 I want to emphasize we remain a local
24 partner, continuing the development of our
25 communities. We look at community development very
0029
1 broadly as a strategic -- as a business opportunity.
2 We see as part of it the access by minority and
3 women-owned businesses, to the purchasing power of
4 Fleet-Boston. We intend to continue and strengthen
5 our minority vendor programs.
6 We see as part of community development the
7 support we offer employee volunteers. Between Team
8 Fleet and Eagle Core almost 20,000 of our employees
9 devote 150,000 hours making our community stronger
10 and healthier. We see as part of community
11 development the embracing of individuals of all
12 races, genders, sexual orientations, customers and
13 employees.
14 Diversity will be an integral part of the
15 management of Fleet-Boston reporting directly to me.
16 We will continue to add to the very strong record we
17 are trying to achieve.
18 Terry has been explicit about the intention
19 to proceed with the BankBoston model for community
20 investment and very complimentary about our record.
21 To say that I am proud of First Community Bank and
22 BankBoston Development Company is an understatement,
23 but it is very important that we will continue to
24 play a leadership role in our new company.
25 Therefore, I ask you all to look at these
0030
1 pledges in light of the very strong community
2 leadership records of Fleet and BankBoston, and
3 driven by our shared New England values, operating
4 in a global economy, grounded in the local
5 community, Terry and I will be supported and aided
6 by the 25,000 employees who, like us and our
7 company, call this region home. We will preserve
8 and enhance the best of our two approaches and
9 records. We will commit our honor and we will honor
10 our commitments.
11 Two months ago I was privileged to
12 represent BankBoston at a White House ceremony where
13 we were given the Ron Brown award for corporate
14 leadership. BankBoston was cited for its community
15 banking group which has successfully served the
16 urban population as an emerging market. I was
17 joined on that day, as I have been joined throughout
18 this effort, by the woman who is most singly
19 responsible for the success of our community banking
20 efforts at BankBoston and who will become the leader
21 of Fleet-Boston's community banking investment
22 initiatives, a daughter of a community activist, a
23 product of the community, a 30-year veteran of
24 BankBoston and by friend, Gail Snowden.
25 MS. SNOWDEN: Thank you, Chad, and thank
0031
1 you to the Board for the opportunity to present our
2 viewpoints and vision for the new bank now taking
3 shape. It's extremely gratifying to me to have
4 heard from both Terry and Chad on the strong
5 position that community investment and in particular
6 BankBoston's model of development will take in the
7 new entity.
8 Nine years ago BankBoston began to redefine
9 the mission and objectives of its retail business in
10 the inner city. By taking a more holistic approach
11 to economic development, we acknowledged that
12 economic growth must evolve from job creation to
13 wealth creation if sustainable growth was to happen.
14 We knew we had to prove we were willing to take
15 risks and to truly invest in community growth in a
16 more direct way.
17 We have learned much along the way,
18 receiving national recognition for our efforts in
19 urban banking through First Community Bank and the
20 BankBoston Development Company, both of which will
21 become part of the new company.
22 Like BankBoston, Fleet has been a leader in
23 small business and mortgage lending, helping to
24 revitalize entire neighborhoods and create new
25 enterprises, particularly those owned by minorities
0032
1 and women. Continuing these records going forward,
2 Fleet-Boston Corp. intends to be the number one
3 small business bank in New England, maintaining its
4 strong ties to keep partnerships with organizations
5 such as the SBA.
6 We believe the key to our success has been
7 our commitment to strong partnerships in the
8 community, whether with individuals, community
9 groups, governments or private organizations. They
10 provide us with essential ties to the fabric of the
11 community. These relationships have helped Fleet
12 and BankBoston to be more responsive to the unique
13 needs of our diverse communities by providing the
14 customer focus that did not exist before.
15 Over these last few months I have joined
16 with my colleagues at both banks in listening to the
17 frank discussions that took place with
18 representatives from over 125 community
19 organizations throughout New England. Our goal was
20 to gain maximum insight into the needs of emerging
21 low to moderate income markets and to develop a
22 comprehensive investment plan that was both business
23 minded and community minded. These discussions have
24 underscored the tremendous gains that our banks have
25 made in helping to revitalize entire neighborhoods
0033
1 within our New England communities such as Codman
2 Square and Egleston Square.
3 The key themes that surfaced provided the
4 framework for our community investment commitment.
5 The result is a 14.6 billion dollar commitment over
6 five years which incorporates the best of our banks'
7 programs while establishing a leadership role of
8 continuing to earn an outstanding CRA rating. This
9 dollar commitment represents a continuation and in
10 most cases an enhancement of LMI lending activities
11 by Fleet and BankBoston when adjusted for divested
12 branches and deposits. We view the plan as
13 responsive and affirmative and continuing to enhance
14 those programs that support wealth creation and
15 economic development.
16 In the past, particularly during merger
17 discussions, various banks have reached agreements
18 with community organizations that may have been too
19 narrowly focused with regard to issues or geography.
20 Fleet-Boston has chosen to create a broad-based plan
21 for its entire marketplace that effectively responds
22 to critical community issues and will offer
23 significant opportunities for multi-state
24 partnerships with organizations as committed as we
25 are to the revitalization of urban and rural areas.
0034
1 I would now like to spend some time
2 outlining the five-year 14.6 billion dollar
3 strategy. Because we believe entrepreneurs are the
4 engine for growth creation and job creation that
5 transform entire communities, over half of this
6 entire commitment, 17.5 billion, is earmarked for
7 the support of small business lending. We will
8 continue our strong support of small business
9 development in LMI communities, with special
10 consideration given to minority and women-owned
11 businesses.
12 In addition, we will go beyond the
13 traditional role of lending to small businesses by
14 providing 100 million in equity investment over five
15 years to help new business development. We also
16 foresee an enhanced SDA partnership in addition to
17 our conventional loan activity. With affordable
18 housing in the forefront of community concerns, we
19 are committing four billion over the next five years
20 to provide additional options for low and moderate
21 income homebuyers in need of home purchase mortgages
22 and refinancing.
23 Additionally, it provides sufficient
24 product flexibility to continue our existing
25 mortgage program partnerships such as the soft
0035
1 second mortgage program to first-time home buyers in
2 Massachusetts.
3 The bank will continue its leadership in
4 community development lending, including at a
5 minimum 1.5 billion in CRA-eligible loans in LMI
6 areas. In addition, the bank will invest 500
7 million in low-income housing tax credit investments
8 in support of the development of much needed
9 affordable housing.
10 We will continue to meet basic consumer
11 borrowing needs with the commitment of one billion
12 for consumer lending in LMI areas.
13 Finally, the bank will expand its technical
14 assistance and support with the commitment of 15
15 million. Interwoven throughout this commitment is
16 what I view as a precedent-setting partnership that
17 we are announcing between Fleet-Boston and Fannie
18 Mae over the next five years. The
19 Fleet-Boston/Fannie Mae communities initiative will
20 commit much needed resources to home ownership and
21 affordable housing and is projected to create
22 affordable housing options for tens of thousands of
23 families in the communities we serve.
24 Affordable home ownership, loans to LMI
25 home borrowers through a variety of innovative and
0036
1 flexible programs such as a new women head of
2 household mortgage initiative, affordable
3 multifamily rental housing, a comprehensive plan to
4 preserve and accelerate the production of affordable
5 rented housing units. We heard this so many times
6 from community groups.
7 And finally, neighborhood revitalization.
8 Fleet-Boston and Fannie Mae will stimulate new
9 housing and community development activity through
10 an innovative, comprehensive, strategic neighborhood
11 investment initiative.
12 What I have presented is a framework of the
13 partnership with Fannie Mae, and we will be
14 announcing more details in the next month or so.
15 Accountability. We see community
16 organizations as critical partners in implementing
17 our commitment for capital access, outreach and
18 education. Key to this approach is the issue of
19 accountability, and we are prepared to be held
20 publicly accountable for meeting all the commitments
21 laid out today. An oversight board comprised of
22 community leaders will be formed and will meet twice
23 a year to receive information and to give us
24 feedback. A community investment subcommittee of
25 the Fleet-Boston board will meet regularly during
0037
1 the year to monitor the corporation's accountability
2 for community initiatives. And in addition, a
3 business line steering committee will meet regularly
4 to monitor business line performance against our
5 commitments and our goals.
6 In conclusion, I look upon this new
7 organization, Fleet-Boston, with the same enthusiasm
8 and excitement as when we undertook the challenge of
9 building a profitable business in New England's
10 underserved urban markets nine years ago. We enter
11 our alliance with Fleet Financial Group with a
12 blueprint for success in this emerging market in
13 which everyone benefits: Our shareholders, our
14 customers and the communities we serve.
15 My colleagues at BankBoston and I are
16 gratified by this opportunity that Terry and Chad
17 are giving us to continue our work within a larger,
18 stronger community. I believe in their commitment
19 to community investment and neighborhood
20 revitalization and that's why I'm sitting here today
21 committed to realizing upon this initiative.
22 At this point I would like to pass the
23 microphone to my colleague, Agnes Bundy Scanlan, who
24 has been instrumental in developing and managing
25 Fleet's community development program since 1994 and
0038
1 who has worked tirelessly over the past few months
2 in meeting with community groups to help develop
3 this community investment commitment.
4 MS. SCANLAN: Thank you, Gail. Good
5 morning. I'm pleased to be here today speaking on
6 behalf of the Fleet-BankBoston merger. Fleet and
7 BankBoston are committed to working toward improving
8 the quality of life and the overall vitality of our
9 communities. I would like to reiterate the pledge
10 expressed by Terry, Chad and Gail. We stand
11 committed to continue to meet the needs of
12 communities we serve through a wide range of
13 financial services and products.
14 We enthusiastically embrace our role in
15 fostering job creation, promoting home ownership,
16 enhancing economic growth and providing education
17 and support to individuals and businesses in urban,
18 rural and suburban communities. This is without
19 question the most rewarding part of my job.
20 Understandably there have been concerns
21 expressed about this merger in terms of its effect
22 upon communities, businesses, and consumers. Terry,
23 Chad, Gail and I have addressed some of them here
24 and in other meetings with concerned parties.
25 Nonetheless, apprehension and misapprehensions
0039
1 remain, fueled in part by incomplete and in some
2 instances incorrect information.
3 In fact, we have some very good stories to
4 tell which have not been noted to date. Affordable
5 housing. In our 125 community meetings, and indeed
6 in everyday conversations, it becomes clear that
7 affordable housing is of great importance to all of
8 us. When Professor James Campen released his study
9 on mortgage lending, it garnered a great deal of
10 attention. He noted that Fleet cut back on its
11 lending following the Shawmut merger and concluded
12 that bank mergers mean less mortgage lending for LMI
13 and minority borrowers.
14 Fleet did experience a decline in mortgage
15 lending overall. It is important to note that Fleet
16 did not intentionally cut back on its loan volume or
17 cede market share willingly. Rather, several
18 factors contributed to reductions in overall
19 mortgage lending, including increased competition
20 within the marketplaces, particularly from
21 non-banks, merger-related branch divestitures and
22 significant management turnover and operational
23 changes at Fleet Mortgage.
24 Despite these developments, Fleet has
25 remained the leader in affordable housing. For the
0040
1 six-state region cited in the study, Fleet held the
2 number one market share for home purchase loans to
3 LMI borrowers in 1995 and 1996, and held the number
4 two market share to these borrowers in 1997,
5 exceeding industry averages.
6 In Massachusetts, a primary area
7 highlighted in the Campen study, Fleet held the
8 number one market share for LMI black and Hispanic
9 borrowers for the period 1995 through 1997. In this
10 regard, even though our combined bank will only be
11 65 percent of its predivestiture size in
12 Massachusetts, today we have announced a commitment
13 commensurate with 100 percent of our predivestiture
14 size for affordable housing lending in this state.
15 In the City of Boston Fleet also held the
16 number one market share for LMI and minority
17 borrowers for the three-year period 1995 through
18 1997. I believe these statistics confirm our
19 commitment to LMI minority borrowers. Fleet and
20 BankBoston are doing the heavy lifting here.
21 Perhaps we should consider the point that
22 as other lenders increase market share, they have an
23 obligation to increase their share of lending to
24 these traditionally underserved markets. Even if
25 they do not have CRA requirements as the banks do,
0041
1 the combined voices of community groups, opinion
2 leaders and the public generally can raise this
3 imperative.
4 Small business lending. In the course of
5 our meetings we heard concerns about the
6 availability of credit to small business. But I
7 think one should consider the fine record of both
8 companies in working with small businesses as an
9 indication of our commitment moving forward. In
10 fact, the largest component of our commitment to
11 small businesses at 7.5 billion over five years,
12 coupled with technical assistance support, is large.
13 At Fleet we serve more than 320,000 small business
14 customers in eight states.
15 Today Fleet is the largest provider of
16 financial services to small businesses in New
17 England. According to the latest industry data, as
18 of June 1998, Fleet is ranked 10th among bank
19 holding companies for small businesses. We are a
20 leading SBA lender. In 1997 Fleet was the top SBA
21 lender in New England with more than 70 million in
22 total SBA volume.
23 I have some more remarks that I would like
24 to submit for the record, but in deference to time
25 I'd like to submit my time and yield to Terry Murray
0042
1 to close.
2 MR. MURRAY: Thank you, Agnes. And that
3 concludes our remarks. We'll be happy to respond to
4 the panel.
5 PRESIDING OFFICER SMITH: Thank you.
6 Questions from the panel?
7 MR. ALVAREZ: I have a question. There are
8 a number of commenters who have referred to the
9 study that Ms. Scanlan discussed, suggesting that
10 Fleet's lending in LMI areas in particular, in home
11 mortgage lending in particular, has declined after
12 each of the last two major mergers Fleet has been
13 involved in, and that has caused some folks to be
14 concerned that one plus one does not equal greater
15 than two in low and moderate income neighborhoods.
16 I understand that the program that you have
17 discussed, the CRA plan, is going forward. I was
18 interested in how the 14.6 billion dollar plan
19 compares to the amount of lending that the two
20 organizations are doing now and whether there are
21 any special steps that Fleet proposes to take to
22 ensure that lending will not decline after this
23 merger if this is approved.
24 MS. SNOWDEN: I'll take that one. In terms
25 of how we got to the number, particularly on
0043
1 affordable mortgage lending, we took a look at the
2 past three years, and the projected combined annual
3 average amount was 820 million dollars a year. We
4 then took an 80 percent divestiture factor, which
5 would give you a number of 736 million.
6 However, our plan commits on an average
7 annual amount of 800 million. So we feel that we
8 are maintaining the same level, and in fact this one
9 is an enhanced level. How you make sure you meet
10 your goals, you have goals, you have tracking at the
11 line of business level. You have the oversight
12 committee, you have the CRA Council that reports to
13 Chad. And so we'll be monitoring this initiative,
14 as we do most business initiatives, to make sure
15 that we stay on track.
16 PRESIDING OFFICER SMITH: Other questions?
17 MR. KWAST: I have a question regarding
18 proposed divestitures. As I think Mr. Murray
19 pointed out, you are proposing to divest a large
20 amount of offices and dollars of deposits. My
21 question is, when considering who to divest your
22 offices to, what are the major factors that you
23 consider in deciding who the winning bidders are.
24 MR. MURRAY: Well, to a large degree
25 Justice has certain ground rules. They are
0044
1 obviously looking for a major new competitor in this
2 marketplace. Subject to that, however, we've been
3 fortunate in that there's been a great deal of
4 interest in the pieces as well as the whole of the
5 divested package. And we have received enormous
6 amounts of interest. And I guess from an ideal
7 point of view we can address Justice's concerns in
8 terms of viable competitors as well as some of the
9 local concerns, and that is something the community
10 banks and local banks participated in these
11 purchases.
12 Over the next two or three weeks we
13 collectively will be looking at the various bids.
14 Obviously it is an auction, and price is a
15 consideration, but not the sole consideration. And
16 I think it's a balance. It's balancing factors
17 between community bank expansion possibilities as
18 well as satisfying Justice's issues of viable
19 competition.
20 The major divestiture is in the State of
21 Massachusetts, which is 8 to $9 billion of the 12
22 billion dollar package; the others being in Rhode
23 Island and Connecticut. But there have been dozens
24 of bids on the packages.
25 PRESIDING OFFICER SMITH: Other questions?
0045
1 If not, thank you very much for coming this morning.
2 And we'll go on to panel number two.
3 Thank you very much.
4 (At this point there was a chant from some
5 members of the audience, saying "Shame on you")
6 PRESIDING OFFICER SMITH: We're going to
7 call on the panelists in the order in which they are
8 listed. So we'll start with Mayor Menino.