NU Online News Service, Oct. 27, 2003, 1:43 p.m. EST – Bank of America Corp., Charlotte, N.C., has announced plans to acquire FleetBoston Financial Corp., Boston, for $47 billion in stock, or about $45 per FleetBoston share.

FleetBoston has $196 billion in assets.

Bank of America, which has $738 billion in assets, would make Charles Gifford, the chairman of FleetBoston, chairman of the combined company, but the headquarters of the combined company would be in Charlotte, Bank of America says.

Kenneth Lewis, chairman of Bank of America, would be the chief executive officer of the combined company, and 12 of the board members of the combined company would come from Bank of America. Seven of the board members would come from FleetBoston.

Wealth management, premier banking and some other businesses would be based in Boston, rather than in Charlotte.

The combine company would have $934 billion in assets, according to SNL Financial L.P., Charlottesville, Va. Only Citigroup Inc., New York, which has $1.2 billion in assets, would be bigger, SNL says.

The only bigger U.S. bank deals were the acquisition of the old Bank of America Corp., San Francisco, by the new Bank of America, which was formerly known as NationsBank Corp., in 1998, and the acquisition of Travelers Group Inc., Hartford, by Citigroup that same year, according to SNL.

Lewis says his company is making the acquisition to gain a strong position in New York City and a leading position in Massachusetts, Rhode Island, Connecticut and New Jersey. He boasts that the combined company would have 33 million consumer relationships.

The combined company “will have 9.8% of the banking deposits in the United States and have the first, second or third largest market shares in 21 of the 29 states in its retail footprint, including significant market shares in 21 of the nation’s 30 largest metropolitan areas,” Bank of America says.

Completion of the deal is subject to approval by antitrust regulators and shareholders as well as state and federal banking regulators.

FleetBoston shares were selling for more than $40 per share before the 2001 stock market slump, but they have been selling for between $30 and $35 per share in recent months.

Bank of America is one of the companies that fought to tear down the legal barriers that once kept banks out of insurance sales and insurance underwriting.

Bank of America’s Bank of America N.A. subsidiary generated about $101 million in insurance commission income and $686 million in revenue from mutual fund and annuity sales in 2002, according to the Bank Insurance Market Research Group, Mamaroneck, N.Y. The firm’s Singer’s Bank Insurance and Investment Data report shows that Bank of America brought in about $300 in insurance commissions in 2002 for every $1 million in deposits.

FleetBoston’s Fleet N.A. Bank unit generated $58 million in insurance commission income and $405 million in revenue from mutual fund and annuity sales in 2002. Singer’s Bank Insurance and Investment Data report shows that Fleet brought in about $500 in insurance commissions for every $1 million in deposits. FleetBoston also sells insurance through its Quick & Reilly securities brokerage unit.