NEW YORK -- Fleet Financial Group Inc. plans to acquire BankBoston Corp. for $16 billion in stock in a deal that will create the nation's eighth largest bank.
The combined bank, to be named Fleet Boston Corp., will be the dominant lender in New England. However, faced with overlapping branches and administrative operations, Fleet Boston may have to cut as many as 5,000 jobs from their total work force of 59,000, executives said Sunday.The need to increase both in size and in breadth has spurred consolidation across financial industries. Last year, banking giant Citibank and the insurance and investment provider Travelers Group Inc. merged to form Citigroup, the nation's largest bank, while Germany's Deutsche Bank AG announced plans to buy Bankers Trust Corp.
Sunday's deal is just the latest for BankBoston and Fleet.
Last year, Fleet purchased Quick & Reilly, the nation's third-largest discount brokerage firm, and followed it with the acquisition of a large credit card portfolio from Advanta Corp. Fleet, currently the ninth-largest bank in the United States, has total assets of $104 billion.
BankBoston, at the same time, expanded its investment banking division with the purchase of San Francisco-based Robertson Stephens last year for $800 million. BankBoston, the nation's 15th-largest bank, has total assets of $74 billion.
The deal will strengthen Fleet's international and investment banking business and give BankBoston the muscle it needs to compete against bigger financial institutions.
"The leaders of the next generation (of banks) will have a full complement of financial products to offer," said Keith Stock, a New York-based independent bank analyst.
The combined bank will initially be headed by Fleet chief executive officer Terrence Murray. After two years, Murray, 59, will step down as chief executive but stay on as chairman, succeeded as CEO by current BankBoston chief executive Charles K. "Chad" Gifford, 56. The following year, Gifford will also take over as chairman.