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Greater Boston moved closer yesterday to seeing its first completed bank merger of 2021 when the Federal Reserve Board approved Boston Private’s acquisition by the parent company of Silicon Valley Bank.
The approval comes five months after Boston Private Financial Holdings and SVB Financial Group announced in early January that the California-based bank would acquire Boston Private in a deal valued at approximately $900 million.
The transaction can be completed as early as the end of June – at least 15 calendar days after yesterday’s decision – and within three months of the approval, unless an extension is requested. After receiving shareholder approved for the deal last month, Boston Private said it expected the transaction to close in mid-2021.
The deal has faced challenges along the way. Boston Private initially delayed the shareholder vote to solicit more proxies and give shareholders more time to consider the first quarter earnings for both Boston Private and SVB.
The deal had been challenged by one of Boston Private’s shareholders, HoldCo Asset Management. HoldCo had argued that the agreement between Boston Private and SVB came after a “non-existent sales process,” contending that Boston Private did not pursue other possible acquisition partners. The asset manager had also called the valuation price unacceptable.
Boston Private was aggressive in refuting HoldCo’s claims. Boston Private’s shareholders ended up approving the deal on May 4.
Silicon Valley Bank executives said in a conference call in January that Boston Private’s technology investments in recent years and its strategy to expand its wealth management business were key reasons for pursuing the deal.
SVB sees an opportunity to expand its position with current commercial clients by $400 billion, including about $250 billion in wealth and $150 billion in lending. Greg Becker, CEO of SVB Financial Group, said Boston Private’s technology, products and expertise would contribute to this growth.
“The combination of SVB and Boston Private will significantly accelerate and scale the growth of our private bank and wealth management strategy, expanding our assets under management exponentially, advancing our expertise, products and technology and providing the opportunity to deepen our client relationships and capture a larger portion of this $400 billion opportunity among our clients,” Becker said in January.
The six current board governors all approved the merger. The Federal Reserve Board evaluated several factors when deciding to approve the deal, including financial stability, effects on market competition, performance related to the Community Reinvestment Act and branch networks.
Boston Private has branches in Massachusetts and California and wealth offices in South Florida. The Fed’s approval included the banks’ plans to operate Boston Private’s 11 California branches and 10 Greater Boston offices as Silicon Valley Bank offices.
However, Boston Private filed plans in March with the Massachusetts Division of Banks to close two Massachusetts branches, one at 800 Boylston St. and another in Lexington. Boston Private has also requested permission to move its 500 Boylston St. branch to 450 Boylston St.
Boston Private’s CEO Anthony DeChellis is slated to co-lead the combined bank with SVB’s Yvette Butler.
This is the first of several bank mergers expected in Massachusetts this year. Other pending deals include Eastern Bank’s acquisition of Century Bank and Rockland Trust’s acquisition of East Boston Savings Bank. Connecticut-based People’s United Bank, which has branches throughout Massachusetts, is being acquired by Buffalo-based M&T Bank. Another Connecticut bank with Massachusetts branches, Webster Bank, is working on a merger-of-equals with New York-based Sterling National Bank.
