The proposed acquisition of FleetBoston Financial Corp. by Bank of America Corp. blends economy-of-scale savings with an ambition to push the envelope in technology. Like Lewis and Clark two centuries ago, the companies seem intent on charting a trail across the North American landscape.
With combined assets of about $930 billion, second only to Citigroup Inc., the company that would be created by the deal, announced Monday, continues a trend that began five years ago with deals that created Citigroup, Wachovia, J.P. Morgan Chase, and the present Bank of America. The banks hope to complete the deal in the first half of next year, although regulators from Connecticut and Massachusetts have said they will keep a close eye on it.
The new Bank of America would have operations spanning the continent. It would claim 9.8% of bank deposits in the United States and will be among the three largest banks in 21 of the 29 states in which it does business. The entity is "only a stone's throw from the national franchise that the banking industry has been waiting for," says Bill Bradway, an analyst with Financial Insights.
Bank of America's aspirations for a national franchise date at least to its 1998 merger with NationsBank, which established its presence on the East Coast. For its part, Fleet has displayed a healthy appetite for acquisitions but will now have to adapt to the role of fitting into a larger organization.
The game plan disclosed by the companies will generate more than $1 billion in cost savings by eliminating redundant systems, combining data centers, and other efficiency gains. The companies spend a combined $3.6 billion a year on IT. A chunk of those savings will be plowed into strategic investments, company officials say.
Bank of America is likely to migrate many of Fleet's operations onto its own systems for consumer banking, credit card, mortgage, Internet banking, and wholesale banking, Bradway says.
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