The Providence Bank of Rhode Island, founded 1791, was the fifth bank established in the United States. The bank grew and prospered along with the new nation. Providence purchased Merchants National Bank of Rhode Island in 1926 and adopted the Merchant name. The bank forged ahead with a series of mergers ultimately building one of the largest banks in the country.
The Formation of Fleet
The bank adopted the name Fleet in 1982 when Gary Cummings, the inspiration behind Fleet, coined the name. He felt the company’s divisions were like a maritime fleet, supporting each other and contributing to the success of the parent organization. Banking regulations at the time precluded banks from conducting business in other states or operating non-financial business activities. Fleet circumvented these restrictions by becoming a holding company, expanding its financial businesses and buying companies.
Fleet Expands Outside of Rhode Island
Banking regulations eventually changed, and Fleet embarked on an expansion strategy lasting more than 20 years. Its first acquisition outside Rhode Island was First Connecticut Bancorp in 1985, and Fleet acquired 40 banks during the 1980s. The decade was a difficult one for many financial institutions. Fleet initially prospered, but the costs of mergers coupled with the financial crisis proved serious. The bank needed an influx of capital to sustain its operations.
The Norstar Story
Elkanah Watson started the State Bank of Albany in 1803 to finance inland water transportation systems. The bank thrived and grew over the next century and a half, eventually changing its name to Norstar. Fleet and Norstar spent most of the 1980s discussing a possible merger and then backing away. Fleet wanted Norstar’s profitable New York State network. The two powerful financial institutions finally merged in 1988, becoming Fleet/Norstar. Fleet, with a strong foothold in New York State, could expand into the lucrative New York City market, a key goal of the bank.
The Bank of New England Acquisition
Fleet endeavored to be a New England financial powerhouse. Bank expansion strategy was designed to create a network reaching from Maine to Florida and west to the Mississippi. Fleet focused on a number of New England competitors, including Shawmut, the Bank of New England and Bank of Boston. As financial difficulties plagued Fleet at the end of the 1980s, a partner in the guise of the private equity firm Kohlberg, Kravis and Roberts (KKR) emerged. The Bank of New England suffered major financial problems during the 1980s and was put up for sale. Fleet, with the help of KKR, successfully bid for the bank. KKR became the bank’s largest shareholder. Fleet instituted a major cost-cutting program and was again a profitable financial institution just one year after receiving KKR funds.
Expansion Continues During the 1990s
Fleet merged with a New England rival, Shawmut, in 1995, catapulting the bank into the number one position in New England and number nine in the United States. Fleet purchased the Quick and Reilly discount brokerage and its online subsidiary, Suretrade, in 1998. The bank continued to scrutinize another New England rival, the Bank of Boston. Efforts to purchase the bank proved futile throughout the decade, but Fleet finally succeeded in completing the bank’s biggest merger in 1999. FleetBoston became the seventh largest bank in the country measured by assets. The bank employed 50,000 people, serviced over 20 million customers and recorded $12 billion in yearly revenues. The company moved its corporate headquarters to Boston and continued its buying spree, acquiring Summit Bancorp, the company’s first New Jersey bank, in 2000.
The End of Fleet
FleetBoston was not the only financial institution eager to become one of the industry’s top companies. Bank of America wanted Fleet’s New England and New York network and succeeded in purchasing FleetBoston for $47 billion in 2004. Bank of America became the country’s second largest bank. All FleetBoston banks adopted the Bank of America name, corporate identity and logo. FleetBoston was history.