First Niagara’s takeover of New Haven’s biggest bank is a done deal.
In two separate decisions today, the State’s Banking Commissioner and the Office of the Comptroller of the Currency issued the final regulatory stamps of approval the Buffalo-based First Niagara Bank needed to buy out NewAlliance Bank. The $1.5 billion deal has been fiercely criticized by Mayor John DeStefano Jr. and state officials as a disaster for New Haven residents.
“This merger is bad for residents, bad for business owners, bad for the NewAlliance employees who will lose their jobs, and bad for New Haven,” DeStefano said in a statement responding to Banking Commissioner Pitkin’s decision. “This transaction will not result in improved service or increased lending to small businesses and moderate- and low-income families. Rather, the result of this transaction will be the enrichment of the bank’s top management.”
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The Federal Reserve Board also gave the deal a green light Friday.
The deal, which leaves New Haven with no locally headquartered major banks, has been a source of controversy since it was proposed in December.
Pitkin held a two-day hearing on March 8 and 9 in Manchester and New Haven to hear the public’s concerns about the merger. In a statement, Pitkin said his approval comes with strings attached.
“Having considered all comments received from the public, I have reviewed the application in its entirety and approved it with certain monitoring conditions to ensure the bank’s commitment to the State of Connecticut is fulfilled.”
Among the conditions Pitkin placed on the combined bank are required quarterly reports on Connecticut lending activities and semi-annual reports on state employment levels.
In January, DeStefano, along with Senator Richard Blumenthal LAW ’73 and Rep. Rosa DeLauro and other officials, denounced the deal in letters to the Federal Reserve, the State Banking Commission, and the Office of the Comptroller of the Currency.
But executives at NewAlliance and First Niagara said the deal will strengthen both banks without harming the community.
“We are very pleased to now have received approval of our transaction from all regulators,” said First Niagara President and CEO John Koelmel in a statement. “We continue to demonstrate our readiness and preparedness to take our organization to the next level as well as our commitment to the customers and communities we serve across the franchise, which will now include Connecticut and Massachusetts.”
The NewAlliance building on Elm and Church streets will now become First Niagara’s New England headquarters. Publicized by First Niagara as a boon to New Haven borrowers, David Ring, a New Haven-area native, will be First Niagara’s New England regional president.
But Ring’s background failed to assuage the concerns of city and state officials.
The decisions by all three regulatory bodies are not a surprise, said Ward 1 Alderman Michael Jones ’11, who added that he shares the mayor’s disappointment.
“A locally controlled bank looks at its customers as more than just zip codes and numbers,” Jones said.
When NewAlliance, originally New Haven Savings Bank converted to a public company in 2003, it accepted the city’s request that it set aside $25 million in seed money for a non-profit community lender. With $16 million of that money, the new START bank opened branches on Whalley and Grand avenues in January.
When the merger is complete, First Niagara will have more than $30 billion in assets and 340 branches across Upstate New York, Pennsylvania, Connecticut and Massachusetts.