Articles
February 2001: THE FLEET FINANCIAL JUGGERNAUT
Remember when ... there were three major commercial banks with headquarters in Worcester, (Massachusetts) as well as several savings banks? During the 1970's, each of the three commercial banks built a tower in downtown Worcester - The Guaranty Bank, Mechanics Bank, and Worcester County National Bank. The two largest savings banks were Peoples Savings Bank at Worcester Center and Worcester County Institution for Savings (WCIS) on Main Street. Each had several branches in the city and the surrounding towns.
In the late 1970s, Providence, Rhode Island had a similar array of banking institutions with headquarters in that city. One of the medium-sized commercial banks in Providence, Industrial National Bank, changed its name to Fleet Bank and set out on a growth-by-acquisition strategy under the leadership of Terry Murray.
Since the mid-1980s, The Guaranty Bank was sold to Bank of New England (former New England Merchants National Bank); Mechanics Bank was sold to Multibank Financial; Worcester County National Bank was sold to Shawmut Bank; Peoples was sold to Shawmut; and WCIS was sold to BankBoston (originally the First National Bank of Boston). Northeast Federal, a large savings bank with a local presence was also sold to Shawmut, and BayBanks, a suburban Boston bank with a Worcester office was sold to BankBoston.
In the early 1990s, Bank of New England went into receivership and was taken over by Fleet Bank and Fleet took up a residence in town with offices in the Guaranty Bank building. Multibank Financial was sold to BankBoston, and BankBoston established offices in the Mechanics tower. After BankBoston bought WCIS, the Mechanics and WCIS operations were assimilated. Meanwhile, Shawmut was consolidating both their Peoples acquisition and their Northeast Federal acquisition.
In the next phase, Fleet bought Shawmut (1995) and BankBoston bought BayBanks(1996), leaving the area with two major regional banking institutions.
This past year, Fleet has taken over BankBoston. Fleet is by far the largest banking institution headquartered in New England. And now all of the major banks we knew in Worcester in the early 1980s are a part of Fleet. That's consolidation!
Yes, there are plenty of other places to bank in town. Savings banks, smaller commercial banks, and credit unions. Commerce is emerging as a sound, though small, commercial bank. Flagship and First Massachusetts are each a part of out-of-state bank holding companies, and Sovereign Bank will pick up some of the old Fleet offices in the city.
Fleet has been a very successful consolidator of banking and financial services companies and has grown to be one of the ten largest banking institutions in the country. Painful as these consolidations may be for some of the employees involved and for some of the communities which lose a local banking presence, Fleet has been quick, decisive, and thorough in this business of acquisition and integration.
Both Peoples Bank and WCIS (BankWorcester) sold shares to the public in IPOs (initial public offering) in 1986. Those investors who bought stock at the IPO and held their stock until the sales to Shawmut and BankBoston respectively were rewarded with handsome gains.
Fleet has done well. The original investors in the two IPOs have done well. Most of the executives of the five banks were richly rewarded through stock options and severance packages. But the community of Worcester lost five vibrant organizations, which employed a lot of people and provided local customers with good services. Each time a local bank was purchased by an out-of-town bank, jobs were eliminated, bank branches were closed, and customers had to adjust to a new bank. The biggest loss to the community on a long-term basis is the organizations themselves. Each of these banks continuously recruited talented people into their management ranks. Often these business leaders were also community leaders - volunteering their own time to local not-for-profit organizations and encouraging their organizations to support and participate in community affairs. This cadre of business leader/community leader has gone away and is not being replaced in like quantity. Next: Behind the financial scenes at Bertucci's Barbi's unpleasant foray into software He sale, resale, resale, and resale of Snapple.
