FleetBoston to Sell Robertson Stephens, Posts In-Line Earnings

The company plans to focus on its core lending and wholesale banking lines.

Author:: TSC Staff
Publish date:: Apr 16, 2002 7:27 AM EDT

FleetBoston

(FBF)

plans to sell its Robertson Stephens investment bank and get out of several other marginal businesses to focus on core lending and consumer operations that aren't as economically sensitive. The New England banking giant also posted in-line earnings of $735 million, or 70 cents a share, for its first quarter.

FleetBoston will also end new investment in Latin America, where it and its predecessors have repeatedly been subject to erratic returns and where a decline in earnings hurt its latest-quarter results.

"We are focusing this company on our strengths: personal financial services and wholesale banking, especially in our footprint," the company said in a statement. "We intend to concentrate our investment spending in these core franchises, while freeing up capital that has been supporting other businesses whose earnings streams have proven to be too volatile or where the risk in the business has weighed heavily on our shareholder value."

Other segments to be sold include its outsourcing and education services business, AFSA, as well as certain investments operations.

Fleet's revenue for the first quarter was $3.3 billion, down 4% from the first quarter of last year but up 27% from $2.6 billion in the fourth quarter. The sequential increase reflected improved capital markets revenue, the absence of a previous quarter's charge for Argentina, and higher levels of investment services revenue and net interest revenue/margin. The decline from a year ago reflected lower net interest revenue, lower revenue from Argentina, and the impact of selling Fleet Mortgage. Net interest margin was 4.13% in the current quarter, compared with 3.96% in the fourth quarter and 4.23% a year ago.

Nonperforming assets were $2.07 billion, or 1.67% of related assets, at March 31, 2002, compared with $1.85 billion, or 1.44% of related assets, at Dec. 31, 2001. The provision for credit losses was $410 million in the current quarter compared with net chargeoffs of $389 million. In the first quarter of 2001, the provision was $315 million and net chargeoffs were $270 million.