Fleet Tries Getting Off Rumor Mill

Have you heard a rumor about FleetBoston Financial ( FBF) in the past few weeks? If so, it's probably not true, say the top executives of the nation's seventh-largest bank.

"It's amazing to us the amount of rumor, nuance and nonsense we've heard the last three weeks," Fleet Chief Financial Officer Eugene McQuade said in an afternoon conference call. "We are dedicated to getting this company back on track and creating value for the shareholders."

McQuade and Fleet Chairman and Chief Executive Chad Gifford denied speculation that the Boston-based bank is about to get bought by another institution, that bank regulators are about to take some sort of enforcement action against the company, and that Fleet intends to either reduce or cancel its dividend.

Bank executives also tried to downplay fears that Fleet will have to take huge charges in future quarters on its Brazilian loan portfolio. Over the past year, Fleet has taken more than $1 billion in after-tax charges on losses on loans and investment made to Argentina, another troubled Latin American country.

For more than two weeks, there's been fervent talk on Wall Street about some other bank stepping in to acquire Fleet, which has seen its stock lose nearly 40% of its value this year. In fact, Fleet's stock on Tuesday jumped $1.88, or more than 9%, to $21.68 on the speculation that the bank might use the after-market conference call to announce a merger with another institution.

But anyone looking for news of a buyout was quickly disappointed. Gifford opened the call with analysts and investors by saying: "Today's discussion doesn't contain anything new and dramatic."

Arranging a conference call to debunk market rumors is becoming something of a trend in the banking business.

Two weeks ago, J.P. Morgan Chase ( JPM), the nation's second-largest bank, employed a similar strategy to quiet the whispers about problems with its big derivatives operation. Like Fleet, J.P. Morgan also sent its top two executives out to field questions from industry analysts.

Earlier in the day, Fleet announced that Henrique de Campos Meirelles has resigned his position as president of global banking to run for congress in Brazil.

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