The local banking industry set in motion a series of mergers, buying opportunities and acquisitions over this first six months that are likely to change the face of banking and financial services in Rhode Island for years to come. Besides the flurry of activity within the banking industry, Fidelity Investments announced it will go ahead with its expansion in Smithfield, adding 1,000 well paying jobs.
The biggest news, however, was the announcement by Fleet Financial and BankBoston that they would merge into what will be among the largest banks in the country, but will also require a divestiture of branches that include virtually the entire BankBoston operation in Rhode Island, or what had been the Rhode Island Hospital Trust franchise.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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And as BankBoston and Fleet were working with regulators, Citizens Financial Group was busy strengthening its commercial portfolio by buying that portion of State Street Bank, and acquiring USTCorp., a Massachusetts based bank that also concentrates on commercial business, for $1.4 billion. Both moves require regulatory approval and will bring Citizens’ assets to $28 billion, solidifying its position as the second largest bank in the region, once the Fleet/BankBoston merger is completed.
While the region’s giant banks were busy merging and acquiring, Washington Trust, the Westerly based bank that has been held up as a model for other community banks, strengthened its hold on South County by announcing the acquisition of Pier Bank in Narragansett and announced that it would be opening a trust office in Providence.
Bank Rhode Island, meanwhile, moved its headquarters from East Providence to the Turks Head Building in Providence, increasing that bank’s visibility at a time when it could become a bidder for some of the BankBoston branches — or customers — in Rhode Island.
Merrill Sherman, Bank Rhode Island president, only says that the bank would be interested “if the right opportunity presents itself.”
In Massachusetts the Justice Department has invited smaller banks to bid on individual branches that Fleet and BankBoston must sell. But in Rhode Island, the Justice Department has yet to offer the same opportunity, and conventional wisdom has been that it will require one bidder to assure a level of competition among larger banks.
Even so, Sherman believes community banks, and particularly Bank Rhode Island will benefit. Bank Rhode Island was formed three years ago when it successfully bid for several branches that became available upon the Fleet acquisition of Shawmut Bank. It has been built, Sherman said, to mid-size on what she calls the “footprint where the BankBoston footprint is in this state.”
When the Fleet/BankBoston merger is complete, she expects Bank Rhode Island to be in a position to capture a significant portion of the retail business currently held by BankBoston.
Bank Rhode Island is in the best position to do that among the community banks, with its franchise stretching from Coventry and Warwick to East Providence, on the East Bay and headquartered in Providence.
The only other community bank with as wide a geographic region is Washington Trust, which dominates in South County and has concentrated its expansion on South County and Connecticut, even though it is opening a trust office in Providence.
.In the branch sweepstakes, one bank that will not be a suitor in Rhode Island is Citizens, which regulators say has too large a market share to be allowed to bid on the Rhode Island branches.
But Citizens can bid on the Massachusetts branches that Fleet and BankBoston must divest, and there has been some speculation in the industry that Citizens’ recent purchases were intended so it would appear to the Justice Department as a more attractive suitor for the Bay State branches that become available.
Larry Fish, Citizens’ chairman, has said the bank has been so busy with its two acquisitions that it has not yet had time to consider what it would do relative to the Fleet/BankBoston branches.
There has also been speculation that the reason Citizens made the purchases was because its parent, Royal Bank of Scotland, informed Citizens a couple of years ago of its intention to sell the bank, and that it would be a greater attraction with assets of $30 billion.
Whether or not either speculation has any grounding in truth, what people in the industry are saying is that the purchases have been “very impressive” for Citizens, and will make it a bank more focused on Massachusetts and seeking to be more powerful in Massachusetts, while Fish maintains it will keep its corporate home in Rhode Island.
