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Fleet cancels online IPO
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October 13, 1999: 1:58 p.m. ET
Cites Web broker stock performance, changing online banking landscape
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NEW YORK (CNNfn) - Fleet Boston Corp., the nation's eighth-largest bank, said Wednesday it canceled plans to turn its Suretrade online brokerage into a separate, publicly traded company.
Fleet (FLT) initially toyed with the idea of launching its Suretrade online brokerage as a public company back in March, figuring it would use the proceeds from an IPO to build up its service and compete more directly with other online financial sites.
Lackluster stock performances of other financial services-based Internet stocks -- along with a rapidly changing landscape of Internet banking -- prompted Fleet to put off the Suretrade spin-off and re-think how it wants to put its banking and brokerage businesses on the Internet.
"It's something we've taken off the table," said Fleet Bank spokesman Charles Salmans. "One reason is the price of brokerage Internet stocks, but the other reason is that it has become evident there needs to be more integration between Internet banking and brokerage."
Fleet's $16 billion acquisition of Bank Boston Corp. earlier this year has generated a huge amount of products and services that Fleet wants to be able to offer its online customers, Salmans said.
He pointed to rival BankOne Corp. (ONE) and its recent launch of Wingspanbank.com -- an online banking and brokerage service that cuts a wider swath in providing a variety of financial services to its Internet clients under a completely different brand name and corporate identity.
"That strategy has altered the competitive landscape a bit," Salmans said.
The other reason for canceling the IPO is the less-than-enthusiastic reception investors have been giving Internet brokerage stocks of late. In the past six months many online brokerages such as Ameritrade Holding Corp. (AMTD), E*Trade Group (EGRP) and others have seen their shares decline as investors questioned whether they can turn a strong profit in an increasingly crowded industry.
Fleet acquired Suretrade last year when it paid $1.6 billion for discount brokerage firm Quick & Reilly Group Inc. Since it was launched as Suretrade in 1997, it has acquired more than 350,000 customer accounts and more than $1.7 billion in customer assets -- many of them lured by its low price of $7.95 a trade.
Fleet Boston shares fell 1-9/16 to 36-11/16 in midday Wednesday trade.
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Fleet Boston
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