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.