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Done Deal: First Niagara’s The New Bank In Town
by Paul Bass | Apr 6, 2011 3:57 pm
(7) Comments | Commenting has been closed | E-mail the Author
Posted to: Business/Labor/ Economic Development
In a move New Haven’s mayor called “regrettable,” a Buffalo bank got the final OK to take over the city’s last major locally headquartered lender.
That OK came from state Banking Commissioner Howard Pitkin. He announced Wednesday afternoon that he has approved First Niagara Financial Group’s $1.5 billion takeover of NewAlliance Bank.
Coupled with two recent federal approvals, from the The Federal Reserve Board of Governors and the Office of the Comptroller of the Currency, that means that the Buffalo-based lender can proceed with plans already underway to have the Church Street-based bank close on Friday April 15 as NewAlliance and reopen Monday April 18 as First Niagara.
Click here to read Pitkin’s letter.
Pitkin’s eventual approval was widely expected.
However, Mayor John DeStefano and other opponents of the takeover had hoped that Pitkin would first extract concessions from the bank in the form of multimillion-dollar charitable commitments to New Haven’s economic development and school reform efforts. In 2003, when NewAlliance formed and took over the old New Haven Savings, Pitkin’s predecessor required the bank first to fund the creation of a local competitor devoted to local lending (the new START Bank).
In his approval letter, Pitkin required First Niagara to file twice-annual reports on how many jobs it has created in Connecticut. At a four-hour public hearing on March 9, opponents of the deal charged First Niagara would cut back on local lending and on local hiring. The bank promised it would create new jobs.
In a statement released in the wake of Pitkin’s decision, Mayor DeStefano charged that the commissioner failed to learn the lessons of the 2008 financial collapse. And he predicted that the takeover will “enrich” the bank’s top managers while hurting local consumers, businesses, and workers.
“This merger is bad for residents, bad for business owners, bad for the New Alliance employees who will lose their jobs, and bad for New Haven. If the banking crisis of 2008 has taught us anything it is that bigger isn’t always better when it comes to banking. This transaction will not result in improved service or increased lending to small businesses and moderate and low income families,” DeStefano stated. “Rather, the result of this transaction will be the enrichment of the banks top management.”
First Niagara CEO John Koelmel said that he doesn’t expect to announce any more job cuts in the months ahead. The banking commissioner’s approval now “enables us to officially flip the switch to play offense and recruit and build up the team that’s necessary to achieve growth,” he told the Independent Wednesday afternoon.
He said that some customers will still be using their old NewAlliance ATM cards and checks for a while before ordering new ones or receiving replacements. Most account numbers will stay the same, except for the “relatively nominal” number of instances in which the same numbers already exist for pre-takeover First Niagara accounts.
First Niagara did not have any new community initiatives ready to announce along with Wednesday’s news.
“In the ordinary course of business, we will further engage with those in the community to make sure we can do everything to be part of the solution,” Koelmel said. “We expect in time as we more fully the understand the community’s needs to be a leading corporate citizen, take that role and responsibility seriously. That’s who we are. That’s how we do business.”
The bank moved its new New England regional president, David Ring, into the Church and Elm street offices this week. Read about that here.
And click on the play arrow to watch Koelmel discuss the New Haven community angle on the takeover, in a previous interview the day of the March 9 public hearing.
Post a Comment
Comments
posted by: Dump them on April 6, 2011 4:30pm
Dump all the banks. Get your money out now. Then go to your local credit union (I’m not advertising for one specific one….) and open an account.
posted by: AvonBarksdale on April 6, 2011 8:26pm
I encourage people to withdraw their money from these for-profit banks and put it in a credit union. There are several viable credit union options in the New Haven area, and tons of information online about why credit unions are more positive than banks.
posted by: Add it all up on April 6, 2011 9:56pm
I love it. In an election year, this 18 year unopposed incumbent Mayor demonizes a businessman who will lay off some people. This Mayor will layoff 2 or 3 times as many people and thinks he’s a saint as he’s on the board of Start Bank, a New Haven competitor bank. In fact our dear Mayor.. has already laid off 100 cops, teachers, and other providers of vital public services, so he’s beaten First Niagara already in damage to the social welfare of New Haven in just the first 3 months of this year. What I really need to know is what gives here. Does our esteemed Mayor think we are all really that stupid that we, or the chosen 12,000, will continue to vote for him. More probable, he has gone mad over the years and thinks we all believe this.
posted by: Anderson Scooper on April 7, 2011 1:51am
How much Peyton Patterson make to deliver New Haven Savings Bank to corporate America?
My guess is she moves out of Connecticut within the year….
Only wish she was paying more than 15% in capital gains tax for her “windfall”. Remind me again why higher taxes for the rich will result in an economic meltdown?
posted by: HowTheSystemWorks on April 7, 2011 2:29pm
There’s something really wrong with the system. The CEO (Patterson) and board of directors are supposed to do what’s in the best interest of shareholders, that’s their job. Yet when a competitor comes along and offers them millions and millions of dollars if they agree to an aquisition, how are they supposed to do what’s in the best interest of the shareholders? Its like a bribe. It seems like such a conflict of interest to me. They give Patterson $20 or $30 million to retire, of course she’s going to accept the offer, regardless of whether its good for shareholders. Of course all businesses work like this not just banks. And I almost dont blame the bank managers for selling out, but its too bad that it works that way. New Haven loses out because it had a good sized bank headquartered here (with high paying jobs), and now it just has a regular branch which is headquartered out of state (where the higher paying jobs will be). Did the managers do what was in the best interest of shareholders? Look at a 5 year chart of NAL - it was $15 5 yrs ago and still is today, it doesn’t seem like they made too well. Really, what did Patterson and the other executives do to deserve all that money?
posted by: first observer on April 7, 2011 3:59pm
HowTheSystemWorks is exactly right. The value added to NewAlliance during the Patterson administration has been to the officers, not to the shareholders. It is going to be a big price to get her gone, but at least she will get gone. Now she gets to laugh all the way to the bank—pun intended.
posted by: Lynn on April 9, 2011 7:50am
Please consider supporting Start Community Bank. “Born” from the last big bank merger in 2004, we fought through this economy to open our doors, and we made it! We are owned by a nonprofit, our Board of Directors serve for no pay. Our products are low or no cost, with small opening deposits required, and with as little ‘small print’ as regulations will allow. We pay taxes (unlike credit unions), we hire local folks, and we have a laser focus on supporting our community. Your local deposits mean local loans that benefit New Haven. Thanks for considering us.
