BofA, Fleet Shareholders OK Merger
FleetBoston Financial Corp. and Bank of America Corp. shareholders approved a $47-billion merger Wednesday that would create the nation’s No. 3 bank and reportedly result in as many as 13,000 job cuts.
More than 67% of Bank of America shareholders approved the deal in a meeting that lasted less than an hour. At a FleetBoston meeting held at the same time, 98% of shareholders gave their blessing to the deal.
“I want to thank the stockholders for their vote of confidence in this company,” Bank of America Chief Executive Ken Lewis, who will lead the combined bank, said after the vote.
The approvals had been expected after last week’s decision by the Federal Reserve that the merger was not anti-competitive or caused too much of a concentration of banking resources.
With about 5,700 branches, the new bank’s footprint would reach from California through the South and up to New England.
The new bank would have assets estimated at $966 billion, trailing only Citigroup and another planned bank mega-merger between Chicago-based Bank One and J.P. Morgan Chase.
FleetBoston shares gained 7 cents to $44.41 on the New York Stock Exchange, where shares of Bank of America advanced 34 cents to $80.45.
A Bank of America spokeswoman said Wednesday she could not confirm a Wall Street Journal story that the bank planned to cut as many as 13,000 jobs after completing the acquisition. The cuts would come through layoffs and attrition from the operations of both banks and amount to about 7% of their combined workforce of 181,000, the newspaper said, quoting unidentified people it said were familiar with the plans.
Last week, an analyst predicted that Bank of America might have to cut as many as 11,000 jobs to attain the level of cost reductions pledged by Lewis. Lewis has said he expects to achieve about $1.6 billion in cost savings by the end of 2005.
The bank has said that cutting jobs is necessary to give investors the kind of returns they expect to see from such a large merger.
The vote comes two days after Bank of America and FleetBoston agreed to pay a total of $515 million to resolve allegations of improper mutual-fund trading and to reduce investor fees by $160 million in the biggest fund- scandal settlement to date.
Regulators had alleged that the banks allowed improper trading that benefited big-ticket clients at the expense of long-term shareholders.
As part of the tentative agreement announced Monday, eight members of the board of Nations Funds, Bank of America’s group of mutual funds, also would be required to resign their positions within a year for their alleged role in allowing the trading violations.
