Attorney General Richard Blumenthal — AND Democratic candidate for U.S. Senate – today wrote First Niagara and NewAlliance banks asking them to provide information on and justification for their proposed merger.
Under Connecticut law, the state Department of Banking may only approve bank mergers that benefit Connecticut’s economy and the public, Blumenthal said in releasing the letter.
“My focus is particularly on jobs and small businesses — whether people will lose jobs or businesses sources of lending — and the economy in general,” Blumenthal said. “I am also concerned about the availability of mortgages, and foreclosure and debt relief to homeowners as well as possible abusive credit card and overdraft fee practices and decision-making responsive to local businesses and community needs.”
Blumenthal’s office is already investigating the proposed merger.
First Niagara responded today:
We look forward to Mr. Blumenthal becoming more familiar with NewAlliance’s proposed merger with First Niagara. We are confident that he will learn that First Niagara is poised to build on the strength that New Alliance has already established in the communities it serves; creating a combination that will be an even stronger resource for local consumers and business and a more robust contributor to the communities.
In each of the communities in which First Niagara has entered over the years, leaders in those communities have found that First Niagara’s track record speaks for itself and as a result they have welcomed us enthusiastically. What they have found is a tremendous resource and partner to consumers, homeowners and businesses, an outstanding employer and an involved and committed supporter of community initiatives
We will of course respond to Mr. Blumenthal’s requests and know that once he has the chance to familiarize himself with the range of benefits that this proposed transaction holds for consumers, businesses and communities, and once he understands First Niagara’s record of performance, he’ll clearly see the value of the proposed merger for the State and communities that he serves.
The Blumenthal letter states, “I believe the proposed merger raises significant and far reaching legal and public policy issues, including its effect on Connecticut jobs, and our economy, as well as community banking — in short, it’s potential adverse impacts as compared to any benefits to the public.
.“I appreciate First Niagara’s public commitment to community focused banking. These words must be matched by actual business practices.”
Blumenthal requests include:
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A list of jobs that may be lost or branches that may close as a result of the merger;
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New products and service that the new bank will offer Connecticut consumers and businesses that NewAlliance does not offer now, as well as other benefits to consumers and businesses, especially small businesses, resulting from a merger;
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The new bank’s plans for providing credit to consumers, homeowners and businesses, especially small businesses;
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Whether loan decisions will continue to be made locally and whether the merged bank will have a program to assist Connecticut consumers seeking to avoid foreclosure. First Niagara’s website currently provides no such assistance;
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A full accounting of all executive and shareholder compensation resulting from the merger, as well as a justification for the payouts and an explanation of how they benefit Connecticut’s economy and consumers;
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First Niagara’s credit card and overdraft fee practices and policies;
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The new bank’s compliance with the Community Reinvestment Act, commitment to banking services for low and moderate income communities and planned donations to local charities.
Blumenthal noted in his letter that New Haven Savings converted in 2003 from a mutual bank, which is owed by depositors and operates in their interest, to the stockholder-owned institution that became NewAlliance. Blumenthal said he expressed concern at the time that the New Haven Savings Bank was restructured not to better serve the community and its customers, but to make itself an attractive takeover target for bigger banks.
Blumenthal said in his letter, “According to your filings with the Securities and Exchange Commission, First Niagara has completed nine major acquisitions since 1999 that have significantly expanded the size and scope of First Niagara.
“The information I seek is necessary to determine whether First Niagara’s move into Connecticut is primarily designed to serve Connecticut consumers or help Connecticut communities and businesses grow or, rather, to make First Niagara an attractive target for yet an even larger bank with even less connection and commitment to Connecticut consumers and communities. A larger bank may benefit bankers, but not necessarily the public, or comply with sound public policy as Connecticut law requires.”
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