In NH, a Mixed Reaction to Sale of Fleet Bank

By David Darman on Sunday, November 2, 2003.

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Bank of America's announcement that it will buy Fleet Bank for 47 billion dollars set off minor tremors in New Hampshire.

Consumer activists warn the merger will harm consumers.

But local bankers and industry analysts disagree.

New Hampshire Public Radio's David Darman has more.

Before the merger was announced, Fleet Bank was far and away the biggest bank in New Hampshire.

And Bank of America?s purchase of Fleet only makes a big bank much bigger.

And that doesn?t sit well with consumer activist Josh Irwin.

He?s the director of the New Hampshire Public Interest Research Group, or New Hampshire PIRG.
25 54 one of the things we?ve seen during the massive consolidation of the banking industry over the last 20 years or so is that bigger banks charge bigger fees and its consumers who are losing out. And I mean bigger fees at the atm machine, higher minimum balances to avoid fees, and a whole litany of charges that really hit consumers in their pocket books. 25 117

But this merger may be different.

For one thing, in previous New England mergers, one big bank from the region typically bought another one.

That meant banks could cut costs and raise profits by eliminating branches and by cutting duplicate staff.

That can?t happen this time, since Bank of America has no branches in the area.

Attorney Chris Gallagher is a lobbyist for the New Hampshire Bankers Association.

He says the new bank lacks incentives to raise prices.

It has to keep an eye on the competition.
21 35 financial services are almost available on an infinite basis almost anywhere. So, its highly competitive. By raising fees to recover a premium or by cutting down on services, there?s no way bank of America can recover what its paid for fleet. The only way it can do that is by providing top flite service, better service, and better products.

Consumer activists also worry that a behemoth like the new Bank of America will crush the state?s nearly 40 small banks.

These smaller banks earn their profits primarily by making loans to small businesses and by lending money to homeowners.

Critics worry that Bank of America will suck up that business as it consolidates its hold on New England Banking.

But small banker Ron Sibley isn?t worried at all.

Sibley is president of Community Guarantee Savings Bank in Plymouth.

He says even before the merger, Fleet never wanted his bank?s customers.
08 132?. They didn?t want to make a 100,000 dollar loan, they wanted to make a ten million loan. So, we can make money doing the smaller things that larger banks would just assume not have to do. 08 203

The state?s banking commissioner says there?s no evidence that large bank consolidations have harmed the state?s small banks.

Peter Hildreth says banks have gobbled up their smaller brethren in Southern New Hampshire time and time again over the last decade.

Still, he says, the state?s banking scene has remained diverse and dynamic.
02 306 you have a bank that started, what four or five years ago that?s already opened 2 new branches in different parts of the state, and is opening a third one. You?ve got other intstitutions that have done the same thing over the last 10 years. ...
Some industry analysts predict the the new Bank of America could provide a benefit to New Hampshire?s economy.

Back in the early 1990?s, many local banks had to close, because the recession hit New England?s real estate market.

Attorney Chris Gallagher, the industry analyst, says a few big banks nearly failed back then because they were not adequately diversified.
20 48 and the reason they survived was that they were able to be financed, and backed by outside interests, who had diversity of investments that enabled them to continue lending in new England. 107 and I think the same principle applies now. ?20 127

Bank of America?s reach into New England isn?t quite a done deal.

Its purchase of Fleet must still be approved by state and federal regulators.