Tale of two banks

Back in the days before massive consolidation when a bank could stand on its own, there were two separate banks, Fleet Financial Group and BankBoston. In October 1999, that all changed when the two banks decided to merge operations and form the FleetBoston Financial Corp. The combined institution boasts assets of roughly $185 billion and ranks as the nation's eighth-largest bank holding company.

Fleet Financial Corp.

Once a sleepy Rhode Island lender, through acquisitions Fleet became the largest bank in New England and one of the 10 largest banks in the U.S. The company's aggressive stance emerged during the 1980s, a decade that saw Fleet acquire 46 smaller banks. During the 1990s, however, Fleet went after bigger targets. It purchased the Bank of New England in 1991, bought Boston-based Shawmut National in 1995, and acquired NatWest in 1996. As of early 1999, the bank was the ninth-largest in the U.S., with about $100 billion in assets, having acquired Advanta Corp's credit card business for $500 million, and about half the credit card accounts of the Crestar Financial Corporation for $48 million in 1998. Also in a busy 1998, Fleet acquired the nation's third-largest discount brokerage, Quick & Reilly, and the U.S. unit of Japan's fourth-largest bank, Sanwa Business Credit. The bank has also rapidly built its mutual fund business by waiving its sales charge on its Galaxy mutual funds for retirement accounts (thus making them "no-load" funds). In 1998, the assets in Fleet's Galaxy accounts shot up more than 100 percent.

Fleet's rise to prominence in the Northeast was symbolized with the 1995 opening of the Fleet Center - the new sports complex that is the home to the storied Boston Celtics and Boston Bruins franchises. However, the bank was not known as an exemplary "corporate citizen" in Beantown, though that perception is changing. The bank gave $1 million to Boston public schools in 1997, and in 1998, gave its biggest corporate donation ever, a $1.2 million gift to underwrite a Monet exhibit at Boston's Museum of Fine Arts.

BankBoston

The oldest chartered bank in the U.S., BankBoston was founded as the Massachusetts Bank in 1784 to compete with British banking firms. The bank was relatively stagnant until the turn of the century, when it merged with the First National Bank of Boston. In the 1980s, Bank of Boston focused its energies on growing throughout New England and became the region's dominant bank. Through a 1996 merger with Massachusetts competitor BayBank, BankBoston ranked as the nation's 15th-largest bank holding company, with assets in the $75 billion range.

As early as 1917, the company expanded internationally, moving into Brazil and Argentina to finance wool merchants. At the time of the merger, BankBoston derived 20 percent of its revenue from those two countries (primarily Brazil), and continues to expand its retail and commercial banking business in South America. Earnings from the region have grown rapidly in recent years, but the financial turmoil in emerging markets worldwide has made BankBoston cheerleaders a bit queasy. Still, the bank has remained committed to its Latin American business in spite of shaky markets there, and has not been hurt by currency troubles in Brazil.

In recent years, the banking industry has witnessed a relaxation of the regulations separating commercial banking and investment banking - and the acquisition of a slew of tony investment banks by commercial banking giants. BankBoston gained entree into the potentially super-lucrative I-banking world when in 1998, BankAmerica decided to sell Robertson Stephens, a San Francisco-based firm that it had acquired only months earlier. BankBoston shelled out $800 million for Robertson Stephens, which is a leading investment bank in high tech. The acquisition was made at a high premium, however, and thus far the bank has not seen its investment pay off.

Brave new banking world

Where does this history lesson leave us, you ask? It leaves us with FleetBoston Financial, which boasts 5,750 retail outlets and stable of some 20 million customers. Terrence C. Murray, the CEO of Fleet Financial Services will assume the CEO post of the new company, while Charles K. Gifford, former CEO of BankBoston, will assume its COO reins.