Inside Wall Street
THE MAKINGS OF A DYNAMIC BANK DUO
Last August, rumors were rampant that Bank of New York, the nation's 16th-largest bank holding company, with assets of $53 billion, would acquire Fleet Financial Group, the aggressive regional financial-sevices company. Fleet's stock hit 41. Most banking analysts were leery of the rumors--and both banks ignored them. Fleet's stock eased to 37.
End of story? Maybe not. Some takeover investors have been adding to their Fleet shares every time the stock dips. One buyout pro insists that talks between Fleet and Bank of New York, "have been ongoing despite analysts' arguments to the contrary." He contends that the talks have reached a stage where "the odds have turned very favorable toward an initial agreement being reached before long" between the two banking companies. A combination would create an "awesome" giant in financial services, he says.
This pro, who is betting on a takeover bid, estimates Fleet's buyout worth at $50 a share. With assets of $49 billion, Fleet owns about 850 branches in the New England region. And it controls Fleet Mortgage Group, which has a servicing portfolio of $70 billion. Fleet's consumer finance, investment-service, and securities operations have also been expanding. The bank is repurchasing 4.4% of its shares.
Bank of New York's securities-processing operations, including the lucrative domestic ADR (American depositary receipt) business, has been growing at a rapid pace, notes George Salem of Prudential Securities. Fleet could give Bank of New York a far-flung branch system that would greatly expand its reach.GENE G. MARCIAL