Exhibit 99.1
CONTACTS: Press: Sovereign Bancorp: Investor: Sovereign Bancorp:
Missy Orlando Jay Sidhu
(617) 748-1805 (610)320-8416
Fleet: Dennis Marlo
James Mahoney (610)320-8437
(617)346-5472 Mark McCollom
James Schepker (610)208-6426
(860)986-7592
BankBoston:
BankBoston: John Kahwaty
Bruce Spitzer (617)434-3650
(617)434-8251
September 7, 1999 For Immediate Release
SOVEREIGN BANCORP TO ACQUIRE 278
BRANCHES
FROM FLEET AND BANKBOSTON
-Creates Boston-Based Sovereign Bank New England, Third Largest
Commercial Banking Franchise in Region-
-Includes Associated Small Business and Middle Market Lending
Relationships-
-Completes Sovereign's Transformation to Super-Regional
Commercial Bank, With Presence From Philadelphia to Boston-
-Helps Fleet and BankBoston Meet Regulatory Requirement to
Complete Pending Merger-
-Immediately Accretive to Sovereign Earnings-
-More Than 3,500 Fleet and BankBoston Jobs to be Retained by
Sovereign-
PHILADELPHIA and BOSTON, September 7, 1999 -- Sovereign Bancorp
[NASDAQ/NMS:SVRN] has entered into an agreement to acquire
278 branch offices, 160 offsite ATMs and 389 onsite ATMs,
associated small business and middle market lending
relationships, and portions of support operations, to be divested
by Fleet Financial Group Inc. [NYSE:FLT] and BankBoston Corp.
[NYSE:BKB], in the largest banking divesture in U.S. history, the
companies announced today. These offices and related commercial
banking lines of business will be called Sovereign Bank New
England, with headquarters in Boston and major regional business
and consumer banking centers throughout Massachusetts,
Connecticut, Rhode Island and New Hampshire. Sovereign has also
agreed to retain employees associated with divested businesses.
It is anticipated that Sovereign Bancorp will assume ownership of
these operations by the first half of 2000, and Sovereign Bank
New England signs will begin going up immediately thereafter.
<PAGE 1>
The approximately $1.4 billion pre-tax, or $918 million after
tax, transaction which equates to a 12% pre-tax premium, or after
tax premium of 7.80%, includes approximately $12 billion in
deposits and approximately $8 billion in loans. It includes
about 176 branch offices and 116 remote ATMs in Massachusetts,
13 branches and 9 remote ATMs in New Hampshire, 50 branch offices
and 17 remote ATMs in Rhode Island, and 39 branches and 18 remote
ATMs in Connecticut. Also included in the acquisition are
associated regional middle-market and small business loans, as
well as portions of BankBoston's branch support units in
Dorchester, MA; the BankBoston Consumer Lending Center in
Providence, RI; and the BankBoston Telebanking Center in East
Providence, RI. All related regional, middle-market and small
business relationship managers and staff will be retained by
Sovereign.
The final aggregate purchase price will be calculated at closing
and will be based upon the level of deposits at closing. The
transaction will be accounted for by the purchase method of
accounting, with the entire premium paid being tax deductible.
The transaction is expected to provide immediately single-digit
accretion to Sovereign's GAAP operating income per share, and
double-digit accretion to cash earnings per share.
Sovereign Bank will continue to be well-capitalized for
regulatory purposes. In connection with the transaction,
Sovereign intends to issue both equity and debt, through public
and/or private sources. Sovereign is currently in discussions
with key private investors for a significant equity financing.
In addition, Sovereign has received committed financing for up to
$1.5 billion from Citibank/Salomon Smith Barney and Lehman
Brothers. The Company's goal is to achieve a 5% tangible equity
ratio at the holding company within 24 months from time of
closing.
The transaction helps Fleet and BankBoston meet Department of
Justice and Federal Reserve guidelines for approval of their
pending merger, as it provides Sovereign Bancorp a leading
presence in New England with a strong commercial banking focus.
Fleet and BankBoston anticipate the announcement within the next
several weeks of buyers for approximately 28 additional branches
to be divested, and anticipate final closing of their merger by
the fourth quarter of 1999.
"This transaction establishes Sovereign as a 'super regional'
bank with assets in excess of $30 billion, positioning us as one
of the strongest lenders to small and mid-sized businesses and
consumers in the region, and providing compelling value
enhancement for shareholders," said Jay S. Sidhu, Sovereign's
Chief Executive Officer and President. "With this acquisition,
we expect to achieve all of our publicly stated financial and
<PAGE 2> balance sheet goals for 2003 as early as the middle of
next year. These include expected average earnings per share
growth that is much higher than our industry averages, a 3.5% or
higher net interest margin, and a foundation for a return on
assets of about 1.2%. In addition, we believe it possible for
Sovereign to realize up to a 25% internal rate of return. The
businesses we are acquiring meet or enhance all of our critical
success factors: superior asset quality, low interest rate risk,
high productivity, and a commitment to a strong sales and service
culture, delivered through committed team members.
"As a result of this acquisition, Sovereign will have the third
largest banking presence in New England and we are delighted to
bring our proven brand of community banking, delivered with a
personal touch, to this region," said Sidhu. "We are committed
to continuing to distinguish ourselves on the basis of superior
customer service. Sovereign's 8,000 team members, together with
its technology partners, Fiserv, UNISYS, and GE Capital, will
work very hard to assure a smooth transition for our customers.
"Following the closing, Sovereign will have in excess of
$30 billion in assets and will be a leading force in a region
with powerful market demographics, and the only competitor with a
franchise extending from Philadelphia to Boston. We are a very
customer and shareholder-oriented company, with the ability,
experience and desire to be a strong competitor in New England.
We are particularly proud of our ability to deliver above-average
returns to shareholders while hiring more experienced staff and
without closing or consolidating any branches," Sidhu continued.
"Sovereign is retaining a talented senior management team and
numerous committed employees in the operations we are acquiring,"
said Sidhu. "Our ability to draw upon their best practices and
procedures, together with our proven success in integrating
acquisitions, will help to assure that we realize the full
benefit of this transaction for our shareholders." He noted that
Sovereign has completed more than 25 acquisitions over the past
12 years, all of which have exceeded initial earnings
projections.
The acquisition will also drive Sovereign's return on equity
(ROE) into the high teens, with tangible ROE expected to be in
the twenties. Given the quality of the customer-base being
acquired, the deposit portfolio's lower cost of funding and
competitive lending yields, and depending upon the amount of
initial equity raised, Sovereign expects the transaction to
result in significantly improved net interest margins and reduced
interest rate sensitivity.
Following the completion of the acquisition, Sovereign will have
in excess of $30 billion in assets, $24 billion in deposits, and
over $24 billion in deposits, and over $22 billion in loans. The
company will have the third largest deposit franchise in
Massachusetts, the third largest in Rhode Island, the third
<PAGE 3> largest in Southern New Hampshire, and the third largest
franchise in the Hartford area. Sovereign will also be one of
the leading small business lenders in New England. Sovereign's
lines of business include commercial and consumer banking, auto
finance, private banking, cash management, international banking
services, credit cards, mortgage banking, asset-based lending,
commercial real estate, trust services, Internet banking services
and government banking.
This purchase is similar to Sovereign's 1998 purchase of 93
CoreStates bank branches that were divested in connection with
First Union's merger with CoreStates. This transaction enhanced
shareholder value while retaining significant numbers of jobs in
the Philadelphia area, and maintaining CoreStates' strong
commitment to supporting the community. It is Sovereign's
intention to replicate their success in this transaction in the
purchase of the Fleet/BankBoston branches throughout the New
England area.
"We are pleased to have reached an agreement with Sovereign
Bancorp that continues to foster competition, maintains
investment in our communities, and ensures that maximum resources
remain available for consumers as well as small- and medium-sized
businesses," said Terrence Murray, Chairman and Chief Executive
Officer of Fleet Financial Group. "We look forward to a smooth
transition for affected Fleet and BankBoston customers and
employees."
Chad Gifford, Chairman and Chief Executive Officer of BankBoston,
said, "It was very important to us that Sovereign was
enthusiastic about retaining Fleet and BankBoston employees from
divested sites. This means that these talented and committed
people can continue to serve customers and their new company at
the same level they have exhibited with us. It is an
understatement to say that we wish them the very best. We are
pleased that many employees Sovereign will retain come from areas
that are otherwise redundant. Along with ongoing attrition and
our hiring freeze, this significantly reduces the number of
employees who will be affected by our previously announced
5,000-position reduction. This has been an important issue for
both Terry and me."
Sovereign's acquisition has been approved by the U.S. Department
of Justice. Sovereign will file the purchase agreement with
other regulators later this month, with final approvals expected
in January. Conversion of customer accounts and systems is
expected to occur during the second and third quarters of 2000.
Sovereign Bancorp presently is about the 40th largest financial
institution in the United States. With roots dating back more
than a century, Sovereign now has over 300 Community Banking
Offices operating in Pennsylvania, northern Delaware and New
Jersey. With the addition of Sovereign Bank of New England,
Sovereign will have about 600 banking offices from New England to
<PAGE 4> Delaware, and will become about the 27th largest bank in
the country.
After both the merger of Fleet and BankBoston and the divestiture
of operations in connection with that merger are complete, Fleet
Boston Corporation will be a $170 billion diversified financial
services company and the eighth largest bank holding company with
consumer and commercial platforms serving 20 million customers.
The new company's lines of business will include commercial and
consumer banking, institutional and investment banking, cash
management, trade services, export finance, mortgage banking,
corporate finance, asset-based lending, commercial real estate
lending, equipment leasing, government banking, investment
management services, credit cards, discount brokerages services,
student loan processing, and full-services banking in Latin
America.
This release contains statements of Sovereign's strategies, plans
and objectives, as well as forecasts and other estimates of
future operating results for Sovereign Bancorp, Inc. as well as
estimates of financial condition, operating efficiencies and
revenue creation. These statements and estimates constitute
forward-looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995, which involve
significant risks and uncertainties. Actual results may differ
materially from the results discussed in these forward-looking
statements.
Factors that might cause such a difference include, but are not
limited to: general economic conditions, changes in interest
rates, deposit flows, loan demand, real estate values and
competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other
economic, competitive, governmental, regulatory, and
technological factors affecting the Company's operations, pricing
products.
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