Two down, one to go.
In its second conversion of branches from the FleetBoston divestiture, Sovereign Bank New England put its name on 80 Eastern Massachusetts and two Rhode Island branches. The Philadelphia bank’s second conversion resulted in fewer customer headaches than the first, but the bank still has its work cut out to convince those customers to stay.
The conversion over the weekend of June 16 added 163 ATMs and more than 400,000 consumer and business accounts to Sovereign Bank New England, including $4 billion in deposits and $3.5 billion in loans. Some consumers did not receive their new ATM cards in time for the changeover, partly due to recent moves or old addresses received from Fleet, Sovereign officials said.
“I think every time we do this we learn something and we get a little better at it so as to make the customer experience a better experience,” said SBNE Chief Executive Officer John Hamill.
The bank learned a lot of lessons from its first conversion on March 24, when the bank opened 90 branches in Western Massachusetts, Connecticut and Rhode Island, Hamill said. Some former BankBoston customers shifted to Sovereign had problems when their six-digit pin numbers did not work with Sovereign’s four-digit system. The bank’s customer service center in Dorchester received a high volume of calls, leaving some new customers on hold for extended periods of time.
In the second round, most of the converted branches came from Fleet, which has four-digit pin numbers. In the weekend of the conversion, Sovereign’s new ATMs had a rejection rate of 2 1/2 percent, compared to its normal rate of about 1 percent.
“In the first weekend of the conversion to have only a 2 1/2 percent rejection rate is very good,” Hamill said. “In Rhode Island and Connecticut, the rejection rates were up in the 10 to 12 percent range.”
Callers to the customer service center on June 19 had an average wait of 10 minutes. Many of the callers asked for the locations of ATMs, said spokeswoman Barbara Coleman.
The last conversion will happen on July 24, when Sovereign converts 109 branches and 210 ATMs in Eastern and Central Massachusetts and Southern New Hampshire. In all, the acquisition of the divestiture package includes approximately $12 billion in deposits and $8 billion in loans. It is the largest branch divestiture in the country’s history.
There is a great deal of customer migration in the Eastern Massachusetts market because of the mergers of BankBoston and Fleet and USTrust and Citizens Bank, analysts say. A number of community banks and credit unions are taking advantage of the changes to market themselves to customers weary of mergers.
At the same time Sovereign raised its red signs, Fleet began replacing old Fleet and BankBoston signs with the new Fleet logo. In addition, Fleet’s branch sales to Eastern Bank and Cape Cod Bank & Trust took place over the weekend of June 23. Eastern bought four branches in Canton, Norwell, Randolph and Brockton. The Cape Cod bank bought two branches in Falmouth and Wareham. On top of that, Sovereign plans to sell four Cape Cod branches to Rockland Trust Co.
Sovereign officials emphasize that they have been through this before. The $35 billion-asset Pennsylvania bank has been through 22 mergers and acquisitions since 1989. But at 281 branches and $12 billion in assets, the Fleet divestiture is the largest in U.S. history.
“We’re hoping to keep all of the customers,” Hamill said. “You always have some migration because of turnover generally and people moving away. We think we will not have any significant migration.”
Familiar Faces
Sovereign Bank New England is touting the fact that it kept on the employees at the branches, so customers will see familiar faces at teller lines and commercial loan departments.
The bank is also trying to satisfy customers with similar or lower fees than they were charged at their previous bank. A comparison of fees at Fleet Bank and Sovereign Bank New England shows the companies have similar charges. Both banks charge $2.50 a month for basic checking accounts. The Fleet One Classic account costs $10 per month or $8 with direct deposit. The comparable Sovereign account, Performance Checking, costs $8 per month or $6 with direct deposit.
Although until recently Sovereign Bank was unknown in New England, consumers see the growing branch network and recognize the bank is not a small operation, Hamill said.
“People see we’re everywhere,” Hamill said. “They see this is not just a small operation that will have a few branches.”
Hamill predicts that Sovereign Bank New England’s status as the new bank in town will help it increase its customer base because customers want to have more banks to choose from. In the next year the bank will focus on expanding its commercial middle-market and business banking units, as well as the consumer loan and mortgage loan departments.
With its entry into the Eastern Massachusetts market, Sovereign showed why it has a reputation as a marketing company with financial products. In addition to an advertising campaign, the company sponsored free subway rides in Boston the morning of June 19, the first day its branches opened. Hamill and other bank staff handed out coffee at the Park Street subway station. One man that had not received his new ATM card approached Hamill that morning. The bank had mailed the card to the man’s previous address, but issued another card that day and sent it by overnight mail so the man received it the next day.
Sovereign also sponsored free rides on the MBTA’s Green Line that night as sports fans traveled to the Red Sox/Yankees game and hung a company banner over Fenway Park.
“I think the fact that we’ve come into the marketplace in a friendly way, offering free rides on the T … sent a loud message,” Hamill said. “People are starting to get a sense that this is a bank that has a community bank touch even though it’s the 25th largest bank in the U.S. I think this issue of ‘I didn’t want to be transferred’ is going away.”
