April 18, 2001

Fleet aims to focus on customers

By Scott Bernard Nelson

In an annual meeting surprisingly devoid of theatrics and fireworks yesterday, FleetBoston Financial Corp. released its first-quarter financial results and unveiled a "customer-centric" focus for New England's largest bank.

Chief executive Terrence Murray and president Chad Gifford separately told shareholders that Fleet's single-minded focus on mergers and acquisitions in recent years has led to a falloff in customer service. With no big deals on the horizon, both planned to turn their attention inward. "We became experts at efficiently folding companies' operations into our own and moving on to the next [merger] opportunity," Murray said. "In today's environment, that isn't enough."

Murray admitted that Fleet "has a long way to go on customer service." Gifford, meanwhile, said Fleet executives "recognize we have much to improve."

The contrition was unexpected, and diffused much of the tension that marked last year's meeting. It was expected that Fleet's financial performance would be lower this year, thanks to the economic slowdown.

Fleet reported operating earnings of 79 cents per share in the first quarter. That's down from 84 cents in the first three months of 2000, but a penny higher than the average forecast by Wall Street analysts surveyed by First Call/

Thomson Financial.

Fleet also posted revenue of $3.73 billion in the quarter, down 18 percent from the same quarter a year ago, attributable primarily to a slide in commissions generated by the bank's venture capital and financial services units.

"The halcyon days of the 1990s are clearly behind us," Fleet chief financial officer Eugene McQuade said. "But we are happy to note that growth in our traditional businesses [over the first quarter last year] almost completely offset the capital markets troubles."

One issue that did generate a ripple of protest in the meeting was executive compensation. A shareholder resolution backed by the group United for a Fair Economy that would have tied executive pay to issues such as customer complaints and community development, received 15 percent shareholder approval, according to a preliminary count. During the debate, shareholders voiced concern that executive compensation has spiraled out of control.

But conflict over the sale of customer information was largely avoided, thanks to Fleet's promise to focus anew on customer complaints. Murray said the bank no longer sells customer information to third parties and that it will look into reports of telemarketers using lists sold in 1998 or 1999.

The Neighborhood Assistance Corp. of America staged a protest outside World Trade Center Boston beforehand and tried to serve Murray with legal notice that it intends to file a class-action lawsuit over customer privacy. But NACA chief executive Bruce Marks said other demonstrations were pulled back in response to Fleet's promises to deal with customer privacy.

"I can't honestly say we didn't expect them to come out saying those things," Marks said. "The question they have to ask is whether people are too cynical to believe their word at this point."

This article is reprinted here for non-commercial, educational, fair use purposes only.