No Change From Bank Merger Till 2000

Members of the class of 1999 may remember BayBank, but after a 1996 merger, students came to know the green signs of BankBoston.

After clearing a few legal hoops this year, "Fleet Boston" will serve the next generation of Harvard undergraduates.

BankBoston, the nation's oldest commercial bank, announced this week that it will merge with another Boston-based company, Fleet Financial Group, to become Fleet Boston Corporation.

The new company will serve 20 million households and hold $180 billion in assets, making it the eighth largest bank in America, according to BankBoston officials.

Although Fleet's Chief Executive Officer (CEO) Terrence Murray '62 will initially chair the new Fleet Boston Corporation, BankBoston CEO Charles K. Gifford called the consolidation of the banks a "merger of equals."

"We did not sell the bank...In my view, we had a strategic combination," Gifford said in a press conference yesterday.

Gifford said the merger will be good for customers.

"We do have complimentary strengths," he said. "We can do it all, and that's what we intend to do."

As a result of the merger, some automatic teller machines (ATMs) and bank branches will be closed, but the companies are still deciding on which ones, Murray said.

Gund Professor of Finance and Banking at Harvard Business SchoolDwight B. Crane said Harvard students will probably benefit from the consolidation.

"Students have had a dominant bank for a long time, and in a sense they will still have that. This isn't an area where we are over-branched," Crane said.

Still, Crane recognized the importance of Harvard Square's small banks.

"You need them there to keep prices in line for the big ones," Crane said. "You don't want a monopoly."

Crane explained the new deal as part of a larger trend in banking.

"One of the issues that banks face is the need for large spending on technologies. That is one of the reasons banks are merging--you have to be bigger to have the money to spend," Crane said. "Some of these new Internet technologies will be helpful to students."

Brian W. Smith '02 said he would love to use the Web to transfer funds easily to his hometown bank in Oklahoma.

But it may be awhile before students feel the effects of the merger. According to Gifford, the companies will not be fully combined until 2001.

BankBoston spokesperson Diane H. Greer said Harvard Square's branch will remain as is during the next year.

"This merger will not be official until the fourth quarter of 1999," Greer said.

"Students have had a dominant bank for a long time, and in a sense they will still have that. This isn't an area where we are over-branched," Crane said.

Still, Crane recognized the importance of Harvard Square's small banks.

"You need them there to keep prices in line for the big ones," Crane said. "You don't want a monopoly."

Crane explained the new deal as part of a larger trend in banking.

"One of the issues that banks face is the need for large spending on technologies. That is one of the reasons banks are merging--you have to be bigger to have the money to spend," Crane said. "Some of these new Internet technologies will be helpful to students."

Brian W. Smith '02 said he would love to use the Web to transfer funds easily to his hometown bank in Oklahoma.

But it may be awhile before students feel the effects of the merger. According to Gifford, the companies will not be fully combined until 2001.

BankBoston spokesperson Diane H. Greer said Harvard Square's branch will remain as is during the next year.

"This merger will not be official until the fourth quarter of 1999," Greer said.