Filed Pursuant to Rule 424(b)(5)
Registration No. 333-00701
Prospectus Supplement to Prospectus Dated March 25, 1996
[Fleet Logo]
Financial Group
$300,000,000
FLEET FINANCIAL GROUP, INC.
7 1/8% SUBORDINATED NOTES DUE APRIL 15, 2006
-------------------
The Subordinated Notes will mature on April 15, 2006, and may not be
redeemed prior to maturity. Interest on the Subordinated Notes offered hereby is
payable semi-annually on April 15 and October 15 of each year, commencing
October 15, 1996 (an "Interest Payment Date"). See "Description of Subordinated
Notes".
The Subordinated Notes are unsecured and subordinated as set forth in the
accompanying Prospectus under "Subordinated Debt Securities--Subordination". As
of December 31, 1995, the aggregate principal amount of Senior Indebtedness of
Fleet Financial Group, Inc. ("Fleet") and Fleet's obligations under Other
Financial Obligations (each as defined in the accompanying Prospectus) was $1.8
billion and $15.1 million, respectively. Payment of principal of the
Subordinated Notes may be accelerated only in the case of the bankruptcy,
insolvency or reorganization of Fleet. There is no right of acceleration in the
case of a default in the payment of interest on the Subordinated Notes or in the
performance of any other covenant of Fleet. See "Subordinated Debt Securities"
in the accompanying Prospectus.
The Subordinated Notes will be represented by Global Securities registered
in the name of the nominee of The Depository Trust Company (the "Depository").
Interests in the Global Securities will be shown on, and transfers thereof will
be effected only through, records maintained by the Depository and its
participants. Except as provided herein, Subordinated Notes in definitive form
will not be issued. Settlement for the Subordinated Notes will be made in
immediately available funds. The Subordinated Notes will trade in the
Depository's Same-Day Funds Settlement System until maturity, and secondary
market trading activity for the Subordinated Notes will therefore settle in
immediately available funds. All payments of principal and interest will be made
by Fleet in immediately available funds. See "Description of Subordinated
Notes--Same-Day Settlement and Payment".
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THE SUBORDINATED NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS
OF ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT FLEET(1)(2)
<S> <C> <C> <C>
Per Subordinated Note................... 99.214% .650% 98.564%
Total................................... $297,642,000 $1,950,000 $295,692,000
</TABLE>
(1) Plus accrued interest, if any, from April 15, 1996.
(2) Before deducting estimated expenses of $175,000 payable by Fleet.
-------------------
The Subordinated Notes are offered, subject to prior sale, when, as and if
accepted by the Underwriters, and subject to approval of certain legal matters
by Cravath, Swaine & Moore, counsel for the Underwriters. It is expected that
the Subordinated Notes will be ready for delivery in book-entry form only
through the facilities of the Depository in New York, New York, on or about
April 15, 1996, against payment therefor in immediately available funds.
-------------------
UBS SECURITIES LLC
CHASE SECURITIES INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
April 10, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SUBORDINATED
NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This section supplements the section entitled "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
Fleet hereby incorporates by reference its Current Reports on Form 8-K dated
March 25, 1996, March 26, 1996 and April 1, 1996, its Current Report on Form
8-K/A dated April 5, 1996 and its Annual Report on Form 10-K for the year ended
December 31, 1995 which were filed by Fleet with the Securities and Exchange
Commission (the "Commission") since the date of the accompanying Prospectus.
All documents filed with the Commission by Fleet pursuant to Sections 13, 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
FLEET FINANCIAL GROUP, INC.
This section replaces the section entitled "Fleet Financial Group,
Inc.--General" in the accompanying Prospectus.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At December 31, 1995, Fleet had total assets of
$84.4 billion, total deposits of $57.1 billion and stockholders' equity of $6.4
billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of New York, Rhode Island, Connecticut, Massachusetts,
Maine, New Hampshire and Florida through its banking subsidiaries, Fleet Bank
("Fleet-NY"); Fleet Bank of New York, National Association ("FBNY"); Fleet
National Bank ("FNB"); Fleet Bank of Maine; Fleet Bank-NH and Fleet Bank, F.S.B.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing,
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securities brokerage services, investment banking, investment advice and
management, data processing and student loan servicing.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 292-2000.
USE OF PROCEEDS
This section replaces the section entitled "Use of Proceeds" in the
accompanying Prospectus.
Fleet intends to use the net proceeds from the sale of the Subordinated
Notes to fund a portion of the purchase price for the NatWest Merger (as defined
below). See "Recent Developments--NatWest Merger", "Unaudited Pro Forma Combined
Financial Statements" and "Notes to Unaudited Pro Forma Combined Financial
Statements". Fleet intends to use any net proceeds from the sale of the
Subordinated Notes not used for such purpose for general corporate purposes,
principally to extend credit to, or fund investments in, its subsidiaries. The
precise amounts and timing of extensions of credit to, and investments in, such
subsidiaries will depend upon the subsidiaries' funding requirements and the
availability of other funds. Pending such applications, the net proceeds may be
temporarily invested in marketable securities or applied to the reduction of
Fleet's short-term indebtedness. Based upon the historic and anticipated future
growth of Fleet and the financial needs of its subsidiaries, Fleet may engage in
additional financings of a character and amount to be determined as the need
arises.
RECENT DEVELOPMENTS
BANK MERGER
On April 1, 1996, the five national banking subsidiaries of Fleet Financial
Group, Inc. located in Connecticut, Massachusetts and Rhode Island were merged
into one national bank. Specifically, Fleet Bank, National Association, Fleet
Bank of Massachusetts, National Association, Fleet National Bank of
Massachusetts and Fleet National Bank merged with and into Fleet National Bank
of Connecticut under the title Fleet National Bank. The main office of the
surviving bank is located in Springfield, Massachusetts, but the merger will
have no effect on jobs or the location of the headquarters of the business lines
of the merged banks.
The Commissioner of Banking of the State of Connecticut has filed a lawsuit
against the Comptroller of the Currency, Fleet Bank, National Association and
Fleet National Bank of Connecticut, seeking to enjoin the merger. The Company
believes that the issue is moot because the merger has already occurred and that
the basis of the complaint is without merit. The Company intends to vigorously
contest such action.
NatWest Merger
On December 19, 1995, Fleet entered into an Agreement and Plan of Merger
(the "NatWest Merger Agreement") with National Westminster Bank Plc ("NatWest
Plc") providing for the merger (the "NatWest Merger") of FBNY with and into
NatWest Bank, N.A. ("NatWest Bank"), a national bank operating in New York and
New Jersey. NatWest Bank will continue its existence following the closing under
the name "Fleet Bank of New York, National Association" (the "Surviving Bank").
Following completion of the transaction, which has a purchase price of $3.26
billion, Fleet will have a strengthened market position in metropolitan New York
to complement its leading position in New England. The NatWest Merger Agreement
provides for a payment of $2.7 billion, subject to adjustment based on the
tangible net worth of NatWest Bank on the closing date of the NatWest Merger
(the "Closing Date"). In addition, the NatWest Merger Agreement provides for an
earnout payment (the "Earnout") of up to $560 million over an eight year period
following the Closing Date which will be based on the level of earnings of the
Surviving Bank during such period. The Earnout may be prepaid by Fleet at any
time at a price to be negotiated, and is subject to accelerated prepayment under
certain circumstances.
Fleet expects to finance the NatWest Merger primarily through internal
funding sources. In addition to the $600 million of preferred stock issued by
Fleet to finance the NatWest Merger, Fleet also
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intends to issue $400 million of debt securities prior to the Closing Date (of
which this offering of Subordinated Notes constitutes a part). Fleet also has
the option to issue up to $175 million of the purchase price in shares of its
Common Stock.
Following the NatWest Merger, Fleet Bank will have approximately $90 billion
in assets reflecting an expected reduction of Fleet's and NatWest's assets. As a
result of the NatWest Merger, Fleet expects to liquidate low-return assets,
primarily securities and residential mortgage loans, and replace them with
higher-yielding loans of NatWest Bank almost entirely funded with core deposits.
In addition, Fleet expects to achieve cost savings of approximately $200
million (pre-tax) within eighteen months following the Closing Date, primarily
through reductions in staff, elimination and consolidation of certain branches,
and the consolidation of certain offices, data processing and other redundant
back-office operations. The extent to which cost savings will be achieved is
dependent upon various factors beyond the control of Fleet, including the
regulatory environment, economic conditions, unanticipated changes in business
conditions and inflation. Therefore, no assurances can be given with respect to
the ultimate level of cost savings to be realized, or that such savings will be
realized in the time-frame currently anticipated.
The NatWest Merger, which is subject to regulatory approval and other
conditions to closing, is expected to close in the second quarter of 1996. There
can be no assurance that such regulatory approvals will be obtained, and, if
obtained, there can be no assurance as to the date of any such approvals or the
absence of any litigation challenging such approvals. Upon completion, based on
information available to Fleet as of the date of this Prospectus Supplement,
Fleet expects to rank as the third largest banking institution in New York, the
fourth largest banking institution in New Jersey (the position currently
occupied by NatWest Bank) and to continue to rank as the largest banking
institution in New England. In total, Fleet expects to operate 1,225 branches
and 2,000 automated teller machines in eight states, and will maintain NatWest
Bank's recently opened customer service and sales operations in Scranton,
Pennsylvania.
For additional information regarding the NatWest Merger, including a copy of
the NatWest Merger Agreement and certain historical and pro forma financial
information related thereto, see "Unaudited Pro Forma Combined Financial
Statements" and "Notes to Unaudited Pro Forma Combined Financial Statements", as
well as Fleet's Current Reports on Form 8-K dated December 19, 1995, February 8,
1996, March 15, 1996 (as amended by a Form 8-K/A dated April 5, 1996) and March
25, 1996, which are incorporated by reference herein.
KKR EXCHANGE
On December 31, 1995, Fleet and certain partnerships (the "Partnerships")
represented by Kohlberg, Kravis & Roberts signed an agreement to exchange the
Partnerships' ownership interest represented by their holdings of Fleet's Dual
Convertible Preferred Stock (the "DCP Stock") into direct ownership of
approximately 19.9 million shares of Fleet's common stock (the "KKR Exchange").
As a result of the exchange, the Partnerships currently hold an approximate 7.5%
ownership interest in Fleet. The Partnerships continue to hold rights to
purchase 6.5 million shares of common stock (the "Rights").
The DCP Stock and the Rights were originally issued to the Partnerships in
1991 to provide capital for Fleet's purchase of the Bank of New England
franchise. As part of the 1991 agreement, the Partnerships had the option of
exchanging the DCP Stock into either 16.0 million shares of Fleet common stock
or a 50% ownership interest in Fleet's former Massachusetts and Connecticut
banking subsidiaries.
For additional information on this transaction, see Fleet's Current Report
on Form 8-K dated December 19, 1995, which is incorporated by reference herein.
1995 AND FOURTH QUARTER RESULTS
Fleet's net income for the year ended December 31, 1995, was $610 million or
$1.57 per share compared to $849 million or $3.09 per share in 1994. Excluding
the impact of the special charges described below, Fleet's earnings were $1.04
billion or $3.77 per share for 1995, compared to $952
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million or $3.48 per share, excluding special charges for 1994. Fleet also
reported a net loss of $138 million or $1.17 per share for the fourth quarter of
1995, compared to net income of $258 million or $0.97 per share for the fourth
quarter of 1994. Excluding the impact of special charges, earnings were $260
million or $0.94 per share in the fourth quarter of 1995.
Special charges for 1995 included $317 million (after-tax) of merger costs
($286 million for the fourth quarter) related to the Shawmut Merger (as
hereinafter defined) and a charge of $112 million (after-tax) related to Fleet's
decision to sell Fleet Finance, Inc. ("Fleet Finance"), its consumer finance
subsidiary, and to sell certain nonperforming assets from its banking
subsidiaries that have been identified for accelerated disposition. Earnings per
share were also reduced by $0.59 related to the KKR Exchange described above.
Net interest income totaled $3.1 billion for both 1995 and 1994 as growth in
earning assets was offset by narrowing margins on those assets. Average loans
for the year increased by $7 billion, or 16%, due to both acquisitions and new
loan origination volume. The net interest margin for 1995 was 4.12%, compared to
4.30% in 1994. The 18 basis point decrease was attributable to an increase in
the cost of interest-bearing liabilities outpacing the increase in yields on
interest-earning assets, which is reflective of an increasingly competitive
market for customer deposits. Net interest income for the fourth quarter of 1995
totaled $747 million while the net interest margin was 4.00%, compared to $758
million and 4.29% in the prior year's fourth quarter and was the result of the
year's trends in deposit pricing noted above.
Credit loss provisions for 1995 were $101 million, compared to $65 million
in 1994, and were $26 million in the fourth quarter of 1995 compared to $17
million for the fourth quarter of 1994. Net charge-offs increased $63 million in
1995 and $37 million from last year's fourth quarter as a result of decreases in
recoveries on loans previously charged off, as well as an increase in consumer
charge-offs relating to an increase in the size of Fleet's credit card portfolio
as well as an increase in charge-offs at Fleet Finance. At December 31, 1995,
nonperforming assets were $499 million, which excludes $317 million of
nonperforming assets which were reclassified to assets held for sale or
accelerated disposition at December 31, 1995.
Noninterest income totaled $1.8 billion for 1995, up 20%, compared to $1.5
billion for 1994. Increases of 10% or more were noted in several lines of
business, including mortgage banking where revenues of $511 million in 1995
represented a 31% increase as a result of Fleet's mortgage servicing portfolio
increasing 30% to $116 billion. Investment services revenue improved 10% to $322
million, reflecting the improvement in the stock and bond markets during 1995,
and student loan servicing fees increased 33% to $72 million due to increased
loan volume associated with the National Direct Student Loan Program at Fleet's
student loan servicing subsidiary. Noninterest income for the fourth quarter
totaled $524 million compared to $414 million for the same period in 1994, an
increase of 27%, as the trends mentioned above continued into the fourth
quarter.
Noninterest expense totaled $3.1 billion during 1995 compared to $3.0
billion for 1994, excluding the special charges described above. Fleet's Federal
Deposit Insurance Corporation ("FDIC") assessment fees decreased $46 million
during 1995 as the FDIC reduced its assessment on deposits during 1995, and
other real estate owned ("OREO") expense declined by $36 million due to reduced
write-downs on OREO property. Offsetting these decreases were increases in
amortization of mortgage servicing rights (MSRs), intangible asset amortization,
and employee compensation. Amortization of MSRs increased by $99 million due
both to the acceleration of MSRs amortization necessitated by the declining
interest rate environment and a 30% growth in the size of Fleet's servicing
portfolio. This increase in MSRs amortization was offset in large part by $77
million of gains on treasury options, which are used as hedges to offset changes
in the valuation of MSRs. Increases in amortization of intangibles, employee
compensation and various other expense categories are primarily attributable to
numerous acquisitions completed during 1995.
Noninterest expense totaled $814 million in the fourth quarter of 1995,
excluding the special charges noted above, compared to $717 million in the
fourth quarter of 1994. The $97 million increase
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in noninterest expense during the fourth quarter of 1995 is primarily
attributable to a $70 million increase in mortgage servicing rights amortization
offset economically by treasury option hedge gains.
Total assets at December 31, 1995 and 1994 were $84.4 billion and $81.0
billion, respectively. Total loans and leases increased from $46.0 billion at
December 31, 1994 to $51.5 billion at December 31, 1995, principally reflecting
increased commercial and residential real estate loans. Commercial loans
increased 18% to $23.3 billion at December 31, 1995, while residential real
estate loans increased 35% during the same period to $11.5 billion. Growth in
Fleet's loan portfolio is attributable both to acquisitions and new loan
origination activity. Fleet's reserve for loan losses at December 31, 1995 was
$1.3 billion, or 2.6% of loans. The investment securities portfolio decreased
$1.8 billion to $19.3 billion at December 31, 1995, as part of an effort to
improve the overall mix of Fleet's interest-earning assets. The market value of
Fleet's investment securities portfolio benefited significantly from falling
interest rates during 1995 and appreciated by $1.1 billion during the year.
During the fourth quarter, Fleet reclassified substantially all of its
securities held to maturity to securities available for sale as the Financial
Accounting Standards Board ("FASB") permitted a one-time opportunity for
institutions to reassess the appropriateness of the designations of all
securities. Stockholders' equity amounted to $6.4 billion at December 31, 1995
compared to $5.5 billion at December 31, 1994.
For additional information regarding Fleet's financial results for the year
ended December 31, 1995, including its audited consolidated financial statements
and management's discussion and analysis relating thereto, see Fleet's Current
Report on Form 8-K dated March 15, 1996.
SHAWMUT MERGER
On February 20, 1995, Fleet and Shawmut National Corporation ("Shawmut")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Shawmut with and into Fleet (the "Shawmut Merger"). The
Shawmut Merger was consummated on November 30, 1995. For additional information
regarding the Shawmut Merger and Fleet's supplemental consolidated financial
statements giving effect thereto, see Fleet's Current Reports on Form 8-K dated
February 20, 1995, February 21, 1995, April 13, 1995, May 17, 1995, June 21,
1995, August 11, 1995, August 23, 1995, November 15, 1995, November 30, 1995 and
January 19, 1996, which are incorporated by reference herein. Unless otherwise
noted, all of Fleet's historical financial information set forth in this
Prospectus Supplement has been restated to give effect to the Shawmut Merger for
all periods presented.
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SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected financial
data for Fleet and its subsidiaries for each of the years in the five-year
period ending December 31, 1995. The following summary should be read in
conjunction with the financial information incorporated herein by reference to
other documents. See "Incorporation of Certain Documents by Reference". All
information included herein has been restated to give effect to the Shawmut
Merger for all periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991
---- ---- ----- ---- ----
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Summary of
Operations:
Interest income (fully
taxable equivalent)........ $ 6,069 $ 5,260 $ 5,086 $ 5,318 $ 5,425
Interest expense............. 3,005 2,161 1,917 2,337 3,142
Net interest income.......... 3,064 3,099 3,169 2,981 2,283
Provision for credit
losses..................... 101 65 327 728 995
Net interest income after
provision for credit losses 2,963 3,034 2,842 2,253 1,288
Noninterest income........... 1,850 1,555 1,883 1,897 1,627
Noninterest expense.......... 3,735 3,145 3,579 3,479 2,864
Net income (loss)............ 610(a) 849 817(b) 366(b) (76)
Earnings (loss) per common
share:
Fully diluted................ $1.57(a) $3.09 $3.03(b) $1.40(b) $(0.44)
Weighted average fully
diluted shares
outstanding................ 265,886,363 264,828,469 257,373,073 237,116,784 204,024,214
Book value per common share.. $22.71 $20.68 $21.76 $17.65 $16.81
Cash dividends declared per
common share............... 1.63 1.40 1.025 0.825 0.80
Common dividends declared as
a percentage of earnings
per share................ 103.8% 45.3% 33.8% 58.9% --(h)
Ratio of Earnings to Fixed
Charges:
Excluding interest on
deposits................... 1.78x 2.33x 2.36x 1.90x --(f)
Including interest on
deposits................... 1.34 1.62 1.56 1.26 --(f)
Ratio of Earnings to Fixed
Charges and Dividends on
Preferred Stock:
Excluding interest on
deposits................... 1.74 2.27 2.27 1.82 --(g)
Including interest on
deposits................... 1.33 1.61 1.54 1.25 --(g)
Consolidated Balance Sheet--
Average Balances:
Total assets............... $82,727 $79,561 $75,286 $71,633 $65,099
Securities held to
maturity(c)................ 7,736 8,787 7,735 4,300 12,358
Securities available for
sale(c).................... 12,779 16,923 14,140 14,061 1,597
Loans and leases, net of
unearned income............ 51,043 44,102 43,283 43,029 40,986
Interest-bearing deposits.. 43,120 40,113 39,766 42,031 40,867
Short-term borrowings........ 14,046 15,355 12,807 8,848 6,520
Long-term debt/subordinated
notes and debentures....... 6,581 5,383 5,039 4,116 3,947
Dual Convertible Preferred
Stock(d)................... -- -- -- 283 134
Stockholders' Equity....... 6,545 5,782 5,311 4,118 3,596
</TABLE>
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991
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(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Ratios:
Net interest margin (fully taxable
equivalent).............................. 4.12% 4.30% 4.63% 4.57% 3.85%
Return (loss) on average assets.......... 0.74(a) 1.07 1.09(b) 0.51(b) (0.12)
Return (loss) on average common
stockholders' equity..................... 9.32(a)(e) 15.66(e) 17.11(b) 9.12(b) (2.73)
Average stockholders' equity to average
assets................................... 7.91 7.27 7.05 6.14 5.52
Tier 1 risk-based capital ratio............ 7.62 9.14 10.44 9.89 7.38
Total risk-based capital ratio............. 11.29 12.92 14.89 14.61 11.27
Period-end reserve for credit losses to
period-end loans and leases, net of
unearned income........................ 2.56 3.25 3.82 4.43 4.73
Net charge-offs to average loans and
leases, net of unearned income......... 0.59 0.54 1.35 2.15 2.02
Period-end nonperforming assets to
period-end loans and leases, net of
unearned income, and other real estate
owned.................................. 0.97(i) 1.65 2.35 4.53 7.05
</TABLE>
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<TABLE>
<S> <C>
(a) Includes impact of the loss on assets held for sale or accelerated disposition ($175
million pretax) and merger related charges ($490 million pretax) recorded in 1995.
Excluding these special charges, return on average common stockholders' equity and
return on average assets would have been 16.29% and 1.26%, respectively, while net
income and earnings per share would have been $1,039 million and $3.77, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53 million in
1993 and extraordinary credit of $18 million in 1992.
(c) For a discussion of Fleet's reclassification in 1992 of its "securities held to
maturity" to "securities held for sale", see Fleet's Current Report on Form 8-K dated
October 21, 1992. Effective January 1, 1994, Fleet adopted FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The standard
requires that securities available for sale be reported at fair value, with unrealized
gains or losses reflected as a separate component of stockholders' equity. In
connection with the adoption of FASB Statement No. 115, Fleet transferred securities
netting to $345 million from the held to maturity portfolio to the available for sale
portfolio. During the fourth quarter of 1995, Fleet reclassified substantially all of
its securities held to maturity to securities available for sale as the FASB permitted
a one-time opportunity for institutions to reassess the appropriateness of the
designations of all securities.
(d) Fleet's DCP Stock was issued in 1991, reclassified to stockholders' equity as of
December 31, 1992 and converted into common equity on December 31, 1995.
(e) Fleet's return on average common stockholders' equity includes the average unrealized
gains and losses on securities available for sale. Excluding the impact of FASB
Statement No. 115, Fleet's return on average common stockholders' equity would have
been 9.25% and 15.35%, respectively, for the years ended December 31, 1995 and 1994.
(f) Fixed charges exceeded earnings by $16 million for both the ratio excluding and
including interest on deposits.
(g) The sum of fixed charges and dividends exceeded earnings by $16 million for both the
ratio excluding and including interest on deposits.
(h) For the year ended December 31, 1991, Fleet reported a $76 million net loss and
therefore the ratio is not applicable.
(i) Excludes $317 million of nonperforming assets reclassified to held for sale or
accelerated disposition at December 31, 1995.
</TABLE>
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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Balance Sheet as of December 31,
1995, and the Unaudited Pro Forma Combined Statement of Income for the twelve
months ended December 31, 1995, of Fleet give effect to the NatWest Merger
accounted for by the purchase method of accounting as if such transaction had
occurred on January 1, 1995.
The pro forma information is based on the historical consolidated financial
statements of Fleet and National Westminster Bancorp, Inc., a Delaware
corporation ("Bancorp") and their subsidiaries under the assumptions and
adjustments set forth in the accompanying Notes to the Unaudited Pro Forma
Combined Financial Statements. NatWest Bank is a wholly-owned direct subsidiary
of National Westminster Bancorp NJ, a New Jersey corporation, which is a
wholly-owned direct subsidiary of Bancorp. Bancorp is a wholly-owned indirect
subsidiary of NatWest Plc. Pursuant to the terms of the NatWest Merger
Agreement, certain operating subsidiaries of Bancorp, including its leasing
subsidiary, and certain assets and liabilities of NatWest Bank will be retained
by Bancorp or transferred to other affiliates of NatWest Plc. Such assets and
liabilities are included as pro forma adjustments in the Unaudited Pro Forma
Combined Financial Statements. The Unaudited Pro Forma Combined Financial
Statements should be read in conjunction with the consolidated financial
statements of Fleet, filed on Fleet's Form 10-K for the fiscal year ended
December 31, 1995, incorporated by reference herein, and the consolidated
historical financial statements of Bancorp, including the respective notes
thereto, filed on Fleet's Form 8-K dated March 25, 1996, incorporated by
reference herein. The pro forma information is presented for comparative
purposes only and is not necessarily indicative of the combined financial
position or results of operations in the future or of the combined financial
position or results of operations which would have been realized had the
acquisition been consummated during the period or as of the dates for which the
pro forma information is presented.
S-9
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
FLEET/
BALANCE SHEET NATWEST
FLEET NATWEST PRO FORMA RESTRUCTURING PRO FORMA
HISTORICAL PRO FORMA ADJUSTMENTS ADJUSTMENTS (D) COMBINED
---------- --------- ----------- --------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents........... $ 4,505 $ 2,021 $ -- $ -- $ 6,526
Federal funds sold and securities
purchased under agreements to
resell............................ 61 2,965 -- (3,026) --
Securities.......................... 19,331 3,033 (1,700)(b) (13,400) 7,264
Loans and leases.................... 51,525 13,926 -- -- 65,451
Reserve for credit losses........... (1,321) (255) -- -- (1,576)
Mortgages held for resale........... 2,005 3,784 -- (3,500) 2,289
Premises and equipment.............. 991 422 (88)(c) -- 1,325
Mortgage servicing rights........... 1,276 14 5(c) -- 1,295
Excess cost over net assets of
subsidiaries acquired............... 935 982 (398)(c) -- 1,519
Other intangibles................... 181 25 242(c) -- 448
Other assets........................ 4,943 2,005 (12)(c) -- 6,936
---------- --------- ----------- --------------- ---------
Total assets........................ $ 84,432 $28,922 $(1,951) $ (19,926) $91,477
---------- --------- ----------- --------------- ---------
---------- --------- ----------- --------------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand............................ $ 12,305 $ 4,866 $ -- $ -- $17,171
Regular savings, NOW, money
market............................ 22,835 8,606 -- -- 31,441
Time.............................. 21,982 7,534 -- (5,275) 24,916
---------- --------- ----------- --------------- ---------
57,122 21,006 -- (5,275) 73,528
---------- --------- ----------- --------------- ---------
Federal funds purchased and
securities sold under agreements
to repurchase..................... 7,425 2,049 (675)(b) (9,474) --
Other short-term borrowings......... 5,144 1,804 675(b) (5,852) 1,096
Accrued expenses and other
liabilities....................... 1,895 683 429(c) -- 3,007
Long-term debt...................... 6,481 -- 400(b) -- 6,881
---------- --------- ----------- --------------- ---------
Total liabilities................... 78,067 25,542 829 (19,926) 84,512
---------- --------- ----------- --------------- ---------
Stockholders' equity:
Preferred equity.................. 399 -- 600(b) -- 999
Common equity..................... 5,966 3,380 (3,380)(c) -- 5,966
---------- --------- ----------- --------------- ---------
Total stockholders' equity.......... 6,365 3,380 (2,780) -- 6,965
---------- --------- ----------- --------------- ---------
Total liabilities and stockholders'
equity............................ $ 84,432 $28,922 $(1,951) $ (19,926) $91,477
---------- --------- ----------- --------------- ---------
---------- --------- ----------- --------------- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
statements
S-10
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS (E) PRO FORMA
---------- --------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................. $ 2,022 $ (1) $ 2,021
Federal funds sold and securities purchased under
agreements to resell.................................... 2,965 -- 2,965
Securities................................................ 3,036 (3) 3,033
Loans and leases.......................................... 14,428 (502) 13,926
Reserve for credit losses................................. (258) 3 (255)
Mortgages held for resale................................. 3,784 -- 3,784
Premises and equipment.................................... 543 (121) 422
Mortgage servicing rights................................. 14 -- 14
Excess cost over net assets acquired...................... 982 -- 982
Other intangibles......................................... 25 -- 25
Other assets.............................................. 2,074 (69) 2,005
---------- ------ ---------
Total assets.............................................. $ 29,615 $(693) $28,922
---------- ------ ---------
---------- ------ ---------
LIABILITIES AND STOCKHOLDER'S EQUITY:
Deposits:
Demand.................................................. $ 4,866 $ -- $ 4,866
Regular savings, NOW, money market...................... 8,606 -- 8,606
Time.................................................... 7,534 -- 7,534
---------- ------ ---------
Total deposits............................................ 21,006 -- 21,006
---------- ------ ---------
Federal funds purchased and securities sold under
agreements to repurchase................................ 2,049 -- 2,049
Other short-term borrowings............................... 1,866 (62) 1,804
Accrued expenses and other liabilities.................... 805 (122) 683
Long-term debt............................................ 654 (654) --
---------- ------ ---------
Total liabilities......................................... 26,380 (838) 25,542
---------- ------ ---------
Stockholder's equity:
Preferred equity........................................ -- -- --
Common equity........................................... 3,235 145 3,380
---------- ------ ---------
Total stockholder's equity................................ 3,235 145 3,380
---------- ------ ---------
Total liabilities and stockholder's equity................ $ 29,615 $(693) $28,922
---------- ------ ---------
---------- ------ ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
statements
S-11
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
FLEET/
BALANCE SHEET NATWEST
FLEET NATWEST PRO FORMA RESTRUCTURING PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS ADJUSTMENTS (D) COMBINED
----------- --------- -------------- -------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and
leases........................... $ 4,785 $ 1,499 $ -- $ (279) $ 6,005
Interest on securities........... 1,365 641 (105)(b) (1,006) 895
----------- --------- ----- ------- -----------
Total interest income............ 6,150 2,140 (105) (1,285) 6,900
Interest expense:
Deposits......................... 1,782 619 -- (271) 2,130
Short-term borrowings............ 836 446 -- (872) 410
Long-term debt................... 478 -- 26(b) -- 504
----------- --------- ----- ------- -----------
Total interest expense........... 3,096 1,065 26 (1,143) 3,044
----------- --------- ----- ------- -----------
Net interest income................ 3,054 1,075 (131) (142) 3,856
Provision for credit losses........ 102 95 -- -- 197
----------- --------- ----- ------- -----------
Net interest income after provision
for credit losses................ 2,952 980 (131) (142) 3,659
----------- --------- ----- ------- -----------
Mortgage banking................... 512 30 -- -- 542
Investment services revenue........ 322 16 -- -- 338
Service charges, fees and
commissions...................... 496 237 -- -- 733
Securities available for sale
gains............................ 38 90 -- -- 128
Other noninterest income........... 496 143 -- -- 639
----------- --------- ----- ------- -----------
Total noninterest income......... 1,864 516 -- -- 2,380
----------- --------- ----- ------- -----------
Employee compensation and
benefits......................... 1,474 452 (2)(c) -- 1,924
Occupancy and equipment............ 468 136 (4)(c) -- 600
Mortgage servicing rights
amortization..................... 196 2 1(c) -- 199
FDIC assessment.................... 70 21 -- -- 91
Marketing.......................... 94 52 -- -- 146
Intangible asset amortization...... 113 77 (21)(c) -- 169
OREO expense....................... 16 6 -- -- 22
Merger and restructuring related
charges.......................... 490 7 -- -- 497
Loss on assets held for sale or
accelerated disposition.......... 175 -- -- -- 175
Other noninterest expense.......... 701 210 -- -- 911
----------- --------- ----- ------- -----------
Total noninterest expense........ 3,797 963 (26) -- 4,734
----------- --------- ----- ------- -----------
Income before income taxes......... 1,019 533 (105) (142) 1,305
Applicable income taxes............ 420 210 (64) (57) 509
----------- --------- ----- ------- -----------
Net income......................... $ 599 $ 323 $ (41) $ (85) $ 796
----------- --------- ----- ------- -----------
----------- --------- ----- ------- -----------
Net income applicable to common
shares:(f)....................... $ 404 $ 323 $ (86)(b) $ (85) $ 556
----------- --------- ----- ------- -----------
----------- --------- ----- ------- -----------
Weighted average common shares
outstanding:(g)
Primary.......................... 264,352,367 264,352,367
Fully diluted.................... 265,442,513 265,442,513
Earnings per share:
Primary.......................... $ 1.53 $ 2.10
Fully diluted.................... 1.52 2.09
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
statements
S-12
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
FLEET PRO FORMA FLEET
HISTORICAL ADJUSTMENTS (H) PRO FORMA
----------- -------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases............ $ 4,721 $ 64 $ 4,785
Interest on securities........................... 1,304 61 1,365
----------- --- -----------
Total interest income.......................... 6,025 125 6,150
Interest expense:
Deposits....................................... 1,726 56 1,782
Short-term borrowings.......................... 801 35 836
Long-term debt................................. 478 -- 478
----------- --- -----------
Total interest expense......................... 3,005 91 3,096
----------- --- -----------
Net interest income.............................. 3,020 34 3,054
Provision for credit losses...................... 101 1 102
----------- --- -----------
Net interest income after provision for credit
losses......................................... 2,919 33 2,952
----------- --- -----------
Mortgage banking................................. 511 1 512
Investment services revenue...................... 322 -- 322
Service charges, fees and commissions............ 492 4 496
Securities available for sale gains.............. 32 6 38
Other noninterest income......................... 493 3 496
----------- --- -----------
Total noninterest income....................... 1,850 14 1,864
----------- --- -----------
Employee compensation and benefits............... 1,448 26 1,474
Occupancy and equipment.......................... 459 9 468
Mortgage servicing rights amortization........... 190 6 196
FDIC assessment.................................. 67 3 70
Marketing........................................ 93 1 94
Intangible asset amortization.................... 105 8 113
OREO expense..................................... 15 1 16
Merger and restructuring related charges......... 490 -- 490
Loss on assets held for sale or accelerated
disposition.................................... 175 -- 175
Other noninterest expense........................ 693 8 701
----------- --- -----------
Total noninterest expense...................... 3,735 62 3,797
----------- --- -----------
Income before income taxes....................... 1,034 (15) 1,019
Applicable income taxes.......................... 424 (4) 420
----------- --- -----------
Net income....................................... $ 610 $(11) $ 599
----------- --- -----------
----------- --- -----------
Net income applicable to common shares:(f)....... $ 416 $(12) $ 404
----------- --- -----------
----------- --- -----------
Weighted average common shares outstanding:(g)
Primary........................................ 264,796,217 264,352,367
Fully diluted.................................. 265,886,363 265,442,513
Earnings per share:
Primary.......................................... $ 1.57 $ 1.53
Fully diluted.................................... 1.57 1.52
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
statements
S-13
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS (E) PRO FORMA
---------- -------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases.................. $1,508 $ (9) $ 1,499
Interest on securities................................. 642 (1) 641
---------- ----- ---------
Total interest income................................ 2,150 (10) 2,140
Interest expense:
Deposits............................................. 619 -- 619
Short-term borrowings................................ 420 26 446
Long-term debt....................................... 61 (61) --
---------- ----- ---------
Total interest expense............................... 1,100 (35) 1,065
---------- ----- ---------
Net interest income.................................... 1,050 25 1,075
Provision for credit losses............................ 95 -- 95
---------- ----- ---------
Net interest income after provision for
credit losses........................................ 955 25 980
---------- ----- ---------
Mortgage banking....................................... 30 -- 30
Investment services revenue............................ 16 -- 16
Service charges, fees and commissions.................. 237 -- 237
Securities available for sale gains.................... 90 -- 90
Other noninterest income............................... 145 (2) 143
---------- ----- ---------
Total noninterest income............................. 518 (2) 516
---------- ----- ---------
Employee compensation and benefits..................... 459 (7) 452
Occupancy and equipment................................ 137 (1) 136
Mortgage servicing rights amortization................. 2 -- 2
FDIC assessment........................................ 21 -- 21
Marketing.............................................. 56 (4) 52
Intangible asset amortization.......................... 78 (1) 77
OREO expense........................................... 6 -- 6
Merger and restructuring related charges............... 10 (3) 7
Loss on assets held for sale or accelerated
disposition............................................ -- -- --
Other noninterest expense.............................. 197 13 210
---------- ----- ---------
Total noninterest expense............................ 966 (3) 963
---------- ----- ---------
Income before income taxes............................. 507 26 533
Applicable income taxes................................ 201 9 210
---------- ----- ---------
Net income............................................. $ 306 $ 17 $ 323
---------- ----- ---------
---------- ----- ---------
Net income applicable to common shares:(f)............. $ 306 $ 17 $ 323
---------- ----- ---------
---------- ----- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
statements
S-14
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
(a) The pro forma information presented is not necessarily indicative of the
results of operations or the combined financial position that would have
resulted had the NatWest Merger been consummated at the beginning of the period
indicated, nor is it necessarily indicative of the results of operations in
future periods or the future financial position of the combined entities. Under
generally accepted accounting principles ("GAAP"), the assets and liabilities of
NatWest Bank will be combined at market value with those of Fleet with the
excess of the purchase price over the net assets acquired allocated to goodwill.
On November 30, 1995, Fleet completed the Shawmut Merger with such merger
accounted for as a pooling of interests.
The pro forma combined financial statements do not give effect to the
anticipated cost savings in connection with the NatWest Merger or the Shawmut
Merger. While no assurance can be given, Fleet expects to achieve cost savings
of approximately $200 million (pre-tax) within eighteen months following the
NatWest Merger. Cost savings of $400 million are also expected to be achieved in
connection with the Shawmut Merger. Such cost savings are expected to be
achieved within the first fifteen months after the consummation of the Shawmut
Merger. Cost savings from both the NatWest Merger and the Shawmut Merger are
expected to be realized primarily through reductions in staff, elimination and
consolidation of certain branches, and the consolidation of certain offices,
data processing and other redundant back-office operations. The extent to which
cost savings will be achieved in connection with the NatWest Merger and the
Shawmut Merger is dependent upon various factors beyond the control of Fleet,
including the regulatory environment, economic conditions, unanticipated changes
in business conditions and inflation. Therefore, no assurances can be given with
respect to the ultimate level of cost savings to be realized, or that such
savings will be realized in the time frame currently anticipated.
The pro forma information gives effect to the NatWest Merger as if the
NatWest Merger had occurred on January 1, 1995. In connection with the NatWest
Merger, Fleet intends to substantially restructure its balance sheet to replace
lower yielding assets, primarily securities and residential loans, with higher
earning assets acquired from NatWest Bank and to replace higher cost funding
with lower cost deposits acquired from NatWest Bank (see note d). The pro forma
information gives effect to the balance sheet restructuring. However, due to
differences in market conditions and the balance sheet mix and size during 1995
compared to the current market conditions and the current balance sheet mix and
size, pro forma results of operations may not be indicative of the results of
operations in the future or which would have resulted had the acquisition been
consummated during the period for which the pro forma information is presented.
In connection with the Shawmut Merger, Fleet has divested 64 branches to
comply with anti-trust concerns. The sales consisted of approximately $2.6
billion in deposits and $1.9 billion in loans. The negative impact of the
divestitures is not expected to be material to the business operations or
financial condition of Fleet and such impact has not been included in the
accompanying Unaudited Pro Forma Combined Financial Statements. No divestitures
are anticipated from the NatWest Merger.
During 1995, Fleet recorded pre-tax charges of $490 million relating to the
Shawmut Merger and $175 million related to Fleet's decision to sell Fleet
Finance and certain nonperforming assets that have been identified for
accelerated disposition. In connection with this charge, approximately $1.7
billion of assets (primarily loans) were classified to held for sale or
accelerated disposition. The after-tax effect of these charges was $429 million.
During the fourth quarter of 1995, Fleet exchanged all of its dual convertible
preferred stock for 19.9 million shares of Fleet common stock. As part of that
transaction, $283 million of preferred equity was reclassified to common equity
and earnings available to common shareholders was reduced by $0.59 per share.
These transactions are reflected in the accompanying Unaudited Pro Forma
Combined Financial Statements.
All dollar amounts included in these Notes to Unaudited Pro Forma Combined
Financial Statements are in thousands unless otherwise indicated.
(b) The NatWest Merger Agreement provides for the payment of $2.7 billion in
cash at the closing; provided that Fleet may elect to pay up to $175 million of
the purchase price in shares of its common stock, $0.01 par value (the "Common
Stock"). The Unaudited Pro Forma Combined Financial Statements assume that no
common stock is issued as part of the purchase price. The following funding
assumptions have been made in conjunction with the NatWest Merger and are
reflected in the accompanying Unaudited Pro Forma Combined Financial Statements.
The $2.7 billion purchase price will be funded through the issuance of $600
million of preferred stock with a dividend rate of 7.50% and the issuance of
$400 million of long-term debt with an average borrowing rate of 6.50%, with the
remaining $1.7 billion purchase price funded through dividends received from
Fleet subsidiaries ($1.375 billion) and asset sales within FNB ($325 million).
The source of funds for the $1.375 billion in dividends received from
subsidiaries is assumed to be the result of asset sales, primarily securities.
As part of this transaction, pro forma adjustments assume Fleet raises an
additional $675 million of short-term borrowings (primarily commercial paper) to
recapitalize certain of the subsidiaries and it is assumed that such
subsidiaries reduce short-term borrowings by $675 million. These funding
assumptions are based on the best information available as of the date of this
Prospectus Supplement and may be different from the actual adjustments to
reflect the funding transactions actually consummated. All funding transactions
are assumed to have occurred as of January 1, 1995.
<PAGE>
(c) Purchase accounting adjustments include adjustments to reflect the fair
value of the assets acquired and liabilities assumed, the elimination of NatWest
Bank's stockholder's equity, and the recording of goodwill and core deposit
intangible in accordance with the purchase method of accounting. These
adjustments are based on the best information available as of the date of the
filing of this Prospectus Supplement and may be different from the actual
adjustments to reflect the fair value of the net assets purchased as of the date
of consummation of the NatWest Merger. Adjustments have been made to the
Unaudited Pro Forma Combined Balance Sheet to
S-15
<PAGE>
reflect the recording of goodwill as well as to eliminate any goodwill balances
previously recorded at NatWest Bank, in accordance with the purchase method of
accounting.
<TABLE>
<S> <C> <C>
Purchase price.................................................... $2,700
Historical net tangible assets acquired........................... $3,380
Elimination of NatWest goodwill and identifiable intangibles...... (990) 2,390
------
Estimated fair value adjustments.................................. (34)
Estimated purchase price adjustment............................... (71)(1)
------
Estimated fair value of net assets acquired....................... 2,285
------
Excess cost over net assets acquired (goodwill)................... $ 415
------
</TABLE>
- ------------
(1) In accordance with the NatWest Merger Agreement, the purchase price will be
adjusted based upon the tangible equity of NatWest Bank as of the closing
date of the NatWest Merger, The pro forma adjustment reflects the estimated
increase in the purchase price as if the NatWest Merger had been consummated
on December 31, 1995.
Goodwill of $415 million has been estimated assuming a purchase price of $2.7
billion which excludes any payments to be made under the earnout agreement. The
NatWest Merger Agreement provides for additional payments (the "Earnout") to be
made annually based upon the level of earnings from the NatWest Bank franchise,
not to exceed $560 million during an eight year "Earnout Period", which will
commence (a) on July 1, 1996 and end on June 30, 2004 if the closing occurs on
or before June 30, 1996, or (b) if the closing occurs after June 30, 1996, on
the first day of the fiscal quarter immediately following such closing and end
on the eighth anniversary of such first day of such fiscal quarter. Assuming
full payout of the Earnout, the total purchase price would be $3.26 billion
resulting in an increase to goodwill of $560 million. Such increase, if any,
will be recorded when earned during the Earnout Period and will be amortized
over the remaining life of the goodwill. Included in the pro forma adjustments
is an increase to goodwill of $169 million as of December 31, 1995, reflecting
the estimated payment required under the Earnout assuming consummation of the
NatWest Merger as of January 1, 1995. This estimate is based on the level of
NatWest Bank pro forma earnings in 1995 and is not necessarily indicative of
payments that may be made, if any, upon consummation of the NatWest Merger.
Estimated fair value adjustments include merger related charges and other
adjustments to reflect the estimated fair value of assets being acquired and
liabilities being assumed. Significant adjustments include core deposit
intangible of $150 million, net of tax, and a liability of $106 million, net of
tax, to reflect Fleet's best estimate of merger related charges. Goodwill due to
the NatWest Merger will be amortized on a straight line basis over 25 years.
Other identifiable intangible assets due to the NatWest Merger will be amortized
over the estimate period of benefit (primarily core deposit intangible, not
exceeding 10 years).
(d) In conjunction with or prior to the NatWest Merger, Fleet and Bancorp
will take certain actions to restructure the Combined Balance Sheet through the
liquidation of low-return assets and the reduction of borrowed funds. These
restructuring adjustments are reflected in the accompanying Unaudited Pro Forma
Combined Financial Statements. The accompanying Unaudited Pro Forma Combined
Financial Statements assume the reduction of approximately $19.9 billion of
assets and an equal amount of borrowed funds. The assets assumed to be reduced
include approximately $13.4 billion of securities with an average yield of
6.18%, approximately $3.5 billion of loans, primarily residential real estate,
with an average yield of 7.98%, and approximately $3.0 billion in federal funds
sold with an average yield of 5.89%. The $19.9 billion of borrowed funds assumed
to be reduced includes approximately $15.3 billion of short-term borrowings with
an average borrowing rate of 5.69%, and $4.6 billion of time deposits with an
average borrowing rate of 5.89%. Asset yields and funding costs have been
estimated based upon historical weighted average yields and funding costs of
similar assets and liabilities in the aggregate and may not be indicative of the
results of operations in the future or which would have been realized had such
transactions been consummated during the period for which the pro forma
information is presented. The balance sheet restructuring adjustments have been
calculated assuming a certain balance sheet size as well as a certain mix of
balance sheet assets (primarily securities and residential loans) to total
assets as of December 31, 1995. As a result, restructuring assumptions may not
be indicative of the results of operations in the future or that would have been
achieved had the NatWest Merger been consummated at the beginning of the period
indicated. Also, due to changing market conditions, balance sheet mix and
balance sheet size restructuring assumptions may differ as compared to the
ultimate balance sheet restructuring upon consummation of the NatWest Merger.
(e) Pursuant to the NatWest Merger Agreement, certain operating subsidiaries
of Bancorp, including its leasing business, and certain assets and liabilities
of NatWest Bank will be retained by Bancorp. Pro forma adjustments reflect the
approximate impact of those assets not being purchased and liabilities not being
assumed.
(f) The Fleet/NatWest Pro Forma net income applicable to common shares
reflects the sum of the Fleet Pro Forma net income applicable per common share
and the NatWest Pro Forma net income applicable per common share adjusted for
the purchase accounting, funding, and restructuring adjustments.
(g) The Fleet Pro Forma weighted average shares outstanding for the year
ended December 31, 1995, reflects the effect of issuing treasury stock in
connection with the NBB Bancorp, Inc. ("NBB") and Northeast Federal Corp.
("Northeast") transactions as if such repurchase of common stock and reissuance
of the treasury stock occurred on January 1, 1995.
(h) During 1995, Fleet also completed the merger (the "NBB Merger") of NBB
with and into Fleet, the merger (the "Plaza Merger") of Plaza Home Mortgage
Corp. ("Plaza") with and into Fleet, the merger (the "Northeast Merger") of
Northeast with and into Fleet, the acquisition (the "Barclays Acquisition") of
substantially all of the assets of Barclays Business Finance Division of
Barclays Business Credit, Inc. ("Barclays") by Fleet and Fleet's repurchase (the
"FMG Repurchase") of the publicly-held shares of Fleet's majority-owned
subsidiary, Fleet Mortgage Group, Inc. ("FMG"), each of which was accounted for
by the purchase method of accounting and each of which is included in the
Unaudited Pro Forma Combined Balance Sheet. Pro forma adjustments to the
Unaudited Pro Forma Combined Statements of Income reflect the impact of the NBB
Merger, the Barclays Acquisition, the FMG Repurchase, the Plaza Merger and the
Northeast Merger which were consummated on January 27, 1995, January 31, 1995,
February 28, 1995, March 3, 1995 and June 9, 1995, respectively, as if such
transactions had been consummated on January 1, 1995. Certain acquisitions
completed by NatWest Bank during 1995 have not been reflected in the Unaudited
Pro Forma Combined Financial Statements due to immateriality.
S-16
<PAGE>
DESCRIPTION OF SUBORDINATED NOTES
The following description of the Subordinated Notes offered hereby (referred
to herein as the "Subordinated Notes" and in the accompanying Prospectus as the
"Subordinated Debt Securities") supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Subordinated Debt Securities set forth in the accompanying Prospectus, to which
description reference is hereby made.
GENERAL
The Subordinated Notes will be issued under an indenture dated as of October
1, 1992, between Fleet and The First National Bank of Chicago, as Trustee (as
supplemented by a First Supplemental Indenture dated November 30, 1992, the
"Indenture"). The Subordinated Notes will be limited to $300 million aggregate
principal amount and will mature on April 15, 2006. Interest on the Subordinated
Notes will be payable at the rate per annum shown on the cover page of this
Prospectus Supplement from April 15, 1996, or from the most recent Interest
Payment Date to which interest has been paid or provided for, semi-annually on
April 15 and October 15 of each year, beginning on October 15, 1996, to the
persons in whose names the Subordinated Notes are registered at the close of
business on March 31 and September 30 of each year next preceding such Interest
Payment Date. The Subordinated Notes may not be redeemed prior to maturity.
BOOK-ENTRY, DELIVERY AND FORM
The Subordinated Notes will be issued in the form of fully registered Global
Securities. The Global Securities will be deposited with, or on behalf of, the
Depository and registered in the name of the Depository's nominee. The
Depository currently limits the maximum denomination of any global security to
$200,000,000. Therefore, for purposes of this Prospectus Supplement, "Global
Security" refers to the Global Securities representing the entire issue of
Subordinated Notes offered hereby.
The Depository has advised as follows: The Depository is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. The Depository holds securities that its
participants ("Participants") deposit with the Depository. The Depository also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers (including the Underwriters named in this
Prospectus Supplement), banks, trust companies, clearing corporations and
certain other organizations. The Depository is owned by a number of its direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the Depository's system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("indirect
participants"). Persons who are not Participants may own beneficial interests in
securities held by the Depository only through Participants or indirect
participants. The Rules applicable to the Depository and its Participants are on
file with the Commission.
The Depository has advised that pursuant to procedures established by it (i)
upon issuance of the Global Security by Fleet, the Depository will credit the
accounts of the Participants designated by the Underwriters with the principal
amount of the Subordinated Notes purchased by the Underwriters and (ii)
ownership of beneficial interests in the Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depository (with respect to Participants' interests), the Participants
and the indirect participants (with respect to the owners of
S-17
<PAGE>
beneficial interests in such Global Security). The laws of some states may
require that certain persons take physical delivery in definitive form of
securities which they own. Consequently, such persons may be prohibited from
purchasing beneficial interests in the Global Security from any beneficial owner
or otherwise.
So long as the Depository's nominee is the registered owner of the Global
Security, such nominee for all purposes will be considered the sole owner or
holder of the Subordinated Notes represented by such Global Security for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in the Global Security will not be entitled to have any of the
Subordinated Notes represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of the
Subordinated Notes in definitive form and will not be considered the owners or
holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in the Global Security must rely on the procedures of the
Depository and, if such person is not a Participant, on the procedures of the
Participant and, if applicable, the indirect participant, through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. Fleet understands that under existing practice, in the event that
Fleet requests any action of the holders or a beneficial owner desires to take
any action a holder is entitled to take, the Depository would act upon the
instructions of, or authorize, the Participant to take such action.
Principal and interest payments on the Global Security registered in the
name of the Depository's nominee will be made to the Depository's nominee as the
registered owner of such Global Security. Fleet and the Trustee will treat the
person in whose name the Global Security is registered as the owner of such
Global Security for the purpose of receiving payment of principal and interest
on the Subordinated Notes and for all other purposes whatsoever. None of Fleet,
the Trustee, the Paying Agent or the Security Registrar has any responsibility
or liability for the payment of principal or interest on the Subordinated Notes
to owners of beneficial interests in the Global Security. The Depository has
advised that upon receipt of any payment of principal or interest in respect of
the Global Security, it will immediately credit the accounts of the Participants
with such payment in amounts proportionate to their respective beneficial
interests in such Global Security as shown on the records of the Depository.
Payments by Participants and indirect participants to owners of beneficial
interests in the Global Security will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of the Participants or indirect participants.
None of Fleet, the Trustee, the Paying Agent or the Security Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Global Security representing all but not part of the Subordinated Notes
being offered hereby is exchangeable for Subordinated Notes in definitive form
of like tenor and terms if (i) the Depository notifies Fleet that it is
unwilling or unable to continue as depository for such Global Security or if at
any time the Depository ceases to be a clearing agency registered under the
Exchange Act, and, in either case, a successor depository is not appointed by
Fleet within 90 days of receipt by Fleet of such notice or of Fleet becoming
aware of such ineligibility, (ii) Fleet in its discretion at any time determines
not to have all of the Subordinated Notes represented by the Global Security and
notifies the Trustee thereof, or (iii) an Event of Default has occurred and is
continuing with respect to the Subordinated Notes. The Global Security
exchangeable pursuant to the preceding sentence shall be exchangeable for
Subordinated Notes issuable in authorized denominations and registered in such
names as the Depository holding such Global Security shall direct. Subject to
the foregoing, a Global Security is not exchangeable, except for a Subordinated
Note or Subordinated Notes of the same aggregate denomination to be registered
in the name of the depository or its nominee or in the name of a successor of
the Depository or a nominee of such successor.
S-18
<PAGE>
A further description of the Depository's procedures with respect to the
Global Security representing the Subordinated Notes is set forth in the
Prospectus under "Description of Debt Securities-- Global Securities". The
Depository has confirmed that it intends to follow such procedures.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Subordinated Notes will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be made
by Fleet in immediately available funds, so long as the Depository continues to
make its Same-Day Funds Settlement System available to Fleet.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the
Subordinated Notes will trade in the Depository's Same-Day Funds Settlement
System until maturity, and secondary market trading activity in the Subordinated
Notes will therefore be required by the Depository to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the
Subordinated Notes.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Fleet has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amount of the Subordinated Notes set forth opposite its
name below. In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Subordinated Notes offered hereby, if any of the Subordinated Notes are
purchased.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
SUBORDINATED
UNDERWRITERS NOTES
------------
<S> <C>
UBS Securities LLC........................................ $ 75,000,000
Chase Securities Inc. .................................... 75,000,000
Merrill, Lynch, Pierce, Fenner & Smith
Incorporated... 75,000,000
Salomon Brothers Inc...................................... 75,000,000
------------
Total................................................... $300,000,000
------------
------------
</TABLE>
The Underwriters have advised Fleet that they propose initially to offer the
Subordinated Notes in part directly to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and in part to
certain dealers at such price less a concession not in excess of .40% of the
principal amount of the Subordinated Notes. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of .25% of the principal amount of
the Subordinated Notes to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
All secondary trading in the Subordinated Notes will settle in immediately
available funds. See "Description of Notes--Same-Day Settlement and Payment".
The Underwriting Agreement provides that Fleet will indemnify the several
Underwriters against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments which the
Underwriters may be required to make in respect thereof.
Fleet does not intend to apply for listing of the Subordinated Notes on a
national securities exchange, but has been advised by the Underwriters that the
Underwriters presently intend to make a market in the Subordinated Notes, as
permitted by applicable laws and regulations. The Underwriters
S-19
<PAGE>
are not obligated, however, to make a market in the Subordinated Notes, and any
such market making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Subordinated Notes.
Certain of the Underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services, for, Fleet
and its subsidiaries in the ordinary course of business.
EXPERTS
This section replaces the section entitled "Experts" in the accompanying
Prospectus.
The consolidated financial statements of Fleet appearing in Fleet's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, incorporated by
reference herein (and elsewhere in the Registration Statement) have been
incorporated by reference herein (and elsewhere in the Registration Statement)
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP refers to changes in the
methods of accounting for mortgage servicing rights, investments in debt and
equity securities, and income taxes.
The consolidated financial statements of Bancorp appearing in Fleet's
Current Report on Form 8-K dated March 25, 1996 incorporated by reference
herein, have been incorporated by reference herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP refers to changes in the methods of accounting for investments
and accounting for postretirement benefits other than pensions.
S-20
<PAGE>
PROSPECTUS
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
FLEET FINANCIAL GROUP, INC.
Fleet Financial Group, Inc., a Rhode Island corporation ("Fleet"), may offer
from time to time debt securities (the "Debt Securities"), which may be either
senior (the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities") in priority of payment, and warrants to purchase Debt Securities
(the "Warrants"), having a public offering price of up to an aggregate of
$1,488,400,000 (or the equivalent thereof if any of the Securities are
denominated in a foreign currency or a foreign currency unit, such as European
Currency Units ("ECU")). If Debt Securities are issued at original issue
discount, Fleet may issue such higher principal amount as may be sold for an
initial public offering price of up to $1,488,400,000 (less the dollar amount of
any securities previously issued hereunder), or the equivalent thereof in one or
more foreign currencies, foreign currency units, or composite currencies. The
Debt Securities and Warrants (collectively, the "Securities") may be offered
separately or as units with other securities, in separate series, in amounts and
at prices and terms to be set forth in an accompanying Prospectus Supplement (a
"Prospectus Supplement"). In addition, the Debt Securities may be convertible
into shares of Fleet's preferred stock (the "Preferred Stock"), depositary
shares representing Preferred Stock (the "Depositary Shares") or common stock
(the "Common Stock") on terms to be set forth in the accompanying Prospectus
Supplement. Pursuant to the terms of the Registration Statement of which this
Prospectus constitutes a part, Fleet may also offer and sell shares of its
Preferred Stock, which may be represented by Depositary Shares, shares of its
Common Stock or warrants to purchase Preferred Stock or Common Stock (the
"Equity Warrants"). Any such Preferred Stock, Depositary Shares, Common Stock or
Equity Warrants will be offered and issued pursuant to the terms of a separate
Prospectus contained in such Registration Statement. The aggregate amount of
Debt Securities and Warrants that may be offered and sold pursuant hereto is
subject to reduction as the result of the sale of any Preferred Stock,
Depositary Shares, Common Stock or Equity Warrants pursuant to such separate
Prospectus.
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement,
together with the terms of the offering of the Securities and the initial price
and net proceeds to Fleet from the sale thereof. The Prospectus Supplement will
include, with regard to the particular Securities, the following information:
(i) in the case of Debt Securities, the specific designation, priority,
aggregate principal amount, denominations, currency or currency unit for which
Debt Securities may be purchased, currency or currency unit in which the
principal and any interest on Debt Securities is payable, location of the
offering, maturity, rate (which may be fixed or variable) and time of payment of
interest, if any, terms for redemption, if any, at the option of Fleet or the
holder, terms for sinking or purchase fund payments, if any, whether any Debt
Securities which are Subordinated Debt Securities will be subordinated to other
indebtedness of Fleet, the initial public offering price, if any, of the Debt
Securities, terms relating to temporary or permanent global securities, special
provisions relating to Debt Securities in bearer form, provisions regarding
registration of transfer or exchange, provisions relating to the payment of any
additional amounts, any conversion or exchange provisions and provisions
regarding original issue discount securities; (ii) in the case of Warrants, the
duration, offering price, exercise price and detachability of any such warrants;
and (iii) in the case of all Securities, whether such Securities will be offered
separately or as a unit with other securities. The Prospectus Supplement will
also contain information, where applicable, about certain United States federal
income tax considerations relating to, and any listing on a securities exchange
of, the Securities covered by the Prospectus Supplement.
Fleet may sell Securities to or through underwriters or dealers, and also
may sell Securities directly to other purchasers or through agents. See "Plan of
Distribution". If any agents or underwriters are involved in the sale of any of
the Securities, their names, any applicable fee, commission, purchase price or
discount arrangements with them will be set forth, or will be calculable from
the information set forth, in the Prospectus Supplement. Fleet may sell
Securities in an offering within the United States ("United States Offering") or
outside the United States ("International Offering").
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALE OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March 25, 1996.
<PAGE>
AVAILABLE INFORMATION
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning Fleet can be inspected and copied at the
Commission's office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's Regional Offices in New York (Suite
1300, Seven World Trade Center, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Common Stock is listed on the New York Stock
Exchange. Reports, proxy material and other information concerning Fleet also
may be inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005. This Prospectus does not contain all the information
set forth in the Registration Statement and Exhibits thereto which Fleet has
filed with the Commission under the Securities Act of 1933, as amended (the
"Act"), which may be obtained from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the prescribed fees, and to which reference is hereby
made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fleet are incorporated
in this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994, as
amended by a Form 10-K/A dated April 28, 1995.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995 and September 30, 1995.
3. Current Reports on Form 8-K dated January 18, 1995, January 27, 1995,
February 20, 1995, February 21, 1995, April 13, 1995, May 11, 1995,
May 17, 1995, June 21, 1995, August 11, 1995, August 23, 1995, October
18, 1995, October 26, 1995, November 15, 1995, November 30, 1995,
December 19, 1995, January 17, 1996, January 19, 1996, February 8,
1996, February 21, 1996 and March 15, 1996.
4. The description of the Common Stock contained in a Registration
Statement filed by Industrial National Corporation (predecessor to
Fleet) on Form 8-B dated May 29, 1970, and any amendment or report
filed for the purpose of updating such description.
5. The description of the Preferred Share Purchase Rights contained in
Fleet's Registration Statement on Form 8-A dated November 29, 1990,
and any amendment or report filed for the purpose of updating such
description.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet pursuant to Sections 13, 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN (OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS). WRITTEN REQUESTS
SHOULD BE MAILED TO INVESTOR RELATIONS DEPARTMENT, FLEET FINANCIAL GROUP, INC.,
ONE FEDERAL STREET, BOSTON, MASSACHUSETTS 02110. TELEPHONE REQUESTS MAY BE
DIRECTED TO (617) 292-2000.
2
<PAGE>
FLEET FINANCIAL GROUP, INC.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At December 31, 1995, Fleet had total assets of
$84.4 billion, total deposits of $57.1 billion and stockholders' equity of $6.4
billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of New York, Rhode Island, Connecticut, Massachusetts,
Maine, New Hampshire and Florida through its banking subsidiaries, Fleet Bank
("Fleet-NY"); Fleet Bank of New York, National Association ("FBNY"); Fleet
National Bank ("Fleet-RI"); Fleet Bank, National Association ("Fleet-CT"); Fleet
National Bank of Connecticut ("FNB-CT"); Fleet Bank of Massachusetts, National
Association ("Fleet-MA"); Fleet National Bank of Massachusetts ("FNB-MA"); Fleet
Bank of Maine; Fleet Bank-NH and Fleet Bank, F.S.B.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing, securities brokerage services,
investment banking, investment advice and management, data processing and
student loan servicing.
On February 20, 1995, Fleet and Shawmut National Corporation ("Shawmut")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Shawmut with and into Fleet (the "Shawmut Merger"). The
Shawmut Merger was consummated on November 30, 1995. For additional information
regarding the Shawmut Merger and Fleet's supplemental consolidated financial
statements giving effect thereto, see Fleet's Current Reports on Form 8-K dated
February 20, 1995, February 21, 1995, April 13, 1995, May 17, 1995, June 21,
1995, August 11, 1995, August 23, 1995, November 15, 1995, November 30, 1995 and
January 19, 1996, which are incorporated by reference herein. Unless otherwise
noted, all of Fleet's historical financial information set forth in this
Prospectus Supplement has been restated to give effect to the Shawmut Merger for
all periods presented.
On December 19, 1995, Fleet entered into an Agreement and Plan of Merger
(the "NatWest Merger Agreement") with National Westminster Bank Plc ("NatWest
Plc") providing for the merger (the "NatWest Merger") of FBNY with and into
NatWest Bank, N.A. ("NatWest Bank"), a national bank operating in New York and
New Jersey. NatWest Bank will continue its existence following the closing under
the name "Fleet Bank of New York, National Association" (the "Surviving Bank").
See "Recent Developments--NatWest Merger". For additional information regarding
the NatWest Merger, including a copy of the NatWest Merger Agreement and certain
historical and pro forma financial information related thereto, see Fleet's
Current Reports on Form 8-K dated December 19, 1995, February 8, 1996 and March
15, 1996, which are incorporated by reference herein.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 292-2000.
REGULATORY MATTERS
General. Fleet is a legal entity separate and distinct from its
subsidiaries. The ability of holders of debt and equity securities of Fleet,
including the holders of the Securities offered hereby, to benefit from the
distribution of assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of the subsidiary
(including depositors in the case of banking subsidiaries) except to the extent
that a claim of Fleet as a creditor may be recognized.
3
<PAGE>
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at December 31, 1995, Fleet's banking subsidiaries could have
declared additional dividends of approximately $559 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
Under the policy of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
FIRREA.
As a result of the enactment of the Financial Institutions Reform, Recovery
and Enforcement Act ("FIRREA") on August 9, 1989, any or all of Fleet's
subsidiary banks can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of any other of Fleet's subsidiary banks or (b) any assistance
provided by the FDIC to any other of Fleet's subsidiary banks in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur without
regulatory assistance.
FDICIA.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA") provides for, among other things, increased funding for the Bank
Insurance Fund (the "BIF") of the FDIC and expanded regulation of depository
institutions and their affiliates, including parent holding companies. A summary
of certain provisions of FDICIA and its implementing regulations is provided
below.
Prompt Corrective Action. The FDICIA provides the federal banking agencies
with broad powers to take prompt corrective action to resolve problems of
insured depository institutions, depending upon a particular institution's level
of capital. The FDICIA establishes five tiers of capital measurement for
regulatory purposes ranging from "well-capitalized" to "critically
undercapitalized." A depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position under certain circumstances. At December 31, 1995, each of Fleet's
subsidiary depository institutions was classified as "well-capitalized" under
the prompt corrective action regulations described above.
Brokered Deposits. Under the FDICIA, a depository institution that is
well-capitalized may accept brokered deposits. A depository institution that is
adequately capitalized may accept brokered deposits only if it obtains a waiver
from the FDIC, and may not offer interest rates on deposits
4
<PAGE>
"significantly higher" than those prevailing rate in its market. An
undercapitalized depository institution may not accept brokered deposits. In
Fleet's opinion, these limitations do not have a material effect on Fleet.
Safety and Soundness Standards. The FDICIA, as amended, directs each federal
banking agency to prescribe safety and soundness standards for depository
institutions relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, asset-quality, earnings and stock valuation. Final
interagency regulations to implement these new safety and soundness standards
have recently been adopted by the federal banking agencies. In July 1995, the
federal banking agencies published proposed guidelines establishing safety and
soundness standards concerning asset quality and earnings. If adopted in final
form, these proposed guidelines will be incorporated into the Interagency
Guidelines Establishing Standards for Safety and Soundness. The ultimate
cumulative effect of these standards cannot currently be forecast.
The FDICIA also contains a variety of other provisions that may affect
Fleet's operations, including new reporting requirements, regulatory standards
for real estate lending, "truth in savings" provisions, and the requirement that
a depository institution give 90 days' prior notice to customers and regulatory
authorities before closing any branch.
Capital Guidelines
Under the Federal Reserve Board's capital guidelines, the minimum ratio of
total capital to risk-adjusted assets (including certain off-balance sheet
items, such as standby letters of credit) is 8%. At least half of the total
capital is to be comprised of common equity, retained earnings, minority
interests in the equity accounts of consolidated subsidiaries and a limited
amount of cumulative and noncumulative perpetual preferred stock, less
deductible intangibles ("Tier 1 capital"). The remainder may consist of
perpetual debt, mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of loan loss
reserves ("Tier 2 capital"). In addition, the Federal Reserve Board requires a
leverage ratio (Tier 1 capital to average quarterly assets, net of goodwill) of
3% for bank holding companies that meet certain specified criteria, including
that they have the highest regulatory rating. The rule indicates that the
minimum leverage ratio should be 1% to 2% higher for holding companies
undertaking major expansion programs or that do not have the highest regulatory
rating. Fleet's banking subsidiaries are subject to similar capital requirements
except that preferred stock must be noncumulative to qualify as Tier 1 capital.
The federal banking agencies continue to consider capital requirements
applicable to banking organizations. Effective September 1, 1995, the federal
banking agencies adopted amendments to their risk-based capital regulations to
provide for the consideration of interest rate risk in the determination of a
bank's minimum capital requirements. The amendments require that banks
effectively measure and monitor their interest rate risk and that they maintain
capital adequate for that risk. Under the amendments, banks with excess interest
rate risk would be required to maintain additional capital beyond that generally
required. In addition, effective January 17, 1995, the federal banking agencies
adopted amendments to their risk-based capital standards to provide for the
concentration of credit risk and certain risks arising from nontraditional
activities, as well as a bank's ability to manage these risks, as important
factors in assessing a bank's overall capital adequacy.
As of December 31, 1995, Fleet's capital ratios on a historical basis
exceeded all minimum regulatory capital requirements.
Under federal banking laws, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including the termination
of deposit insurance by the FDIC and seizure of the institution.
5
<PAGE>
Interstate Banking and Branching Legislation
On September 29, 1994, President Clinton signed the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act") into law.
The Interstate Act facilitates the interstate expansion and consolidation of
banking organizations by permitting (i) beginning one year after enactment of
the legislation, bank holding companies that are adequately capitalized and
managed to acquire banks located in states outside their home states regardless
of whether such acquisitions are authorized under the law of the host state,
(ii) the interstate merger of banks after June 1, 1997, subject to the right of
individual states to "opt in" or "opt out" of this authority prior to such date,
(iii) banks to establish new branches on an interstate basis provided that such
action is specifically authorized by the law of the host state, (iv) foreign
banks to establish, with approval of the appropriate regulators in the United
States, branches outside their home states to the same extent that national or
state banks located in such state would be authorized to do so and (v) beginning
September 29, 1995, banks to receive deposits, renew time deposits, close loans,
service loans and receive payments on loans and other obligations as agent for
any bank or thrift affiliate, whether the affiliate is located in the same or
different state. Connecticut and Rhode Island, which are two states in which
Fleet subsidiaries conduct banking operations, have adopted legislation opting
into the interstate provisions of the Interstate Act. Fleet has recently filed
applications for approval by the Office of the Comptroller of the Currency to
merge its banking subsidiaries in Connecticut, Massachusetts and Rhode Island in
order to achieve cost savings and to increase convenience to its customers in
those states.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of Fleet's subsidiary banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") administered by the
FDIC. The FDIC has adopted regulations establishing a permanent risk-related
deposit insurance assessment system. Under this system, the FDIC places each
insured bank in one of nine risk categories based on (a) the bank's
capitalization and (b) supervisory evaluations provided to the FDIC by the
institution's primary federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC. On November 14, 1995, the FDIC voted to decrease
premiums effective January 1, 1995. The decrease lowered the rate of deposit
insurance premiums by $.04 per $100 of deposits for banks in each risk
assessment category. As a result, banks in the highest capital and supervisory
evaluation categories have an assessment rate of $0.00, and pay only the minimum
assessment of $2,000 per year for deposit insurance. Banks in the lowest capital
and supervisory evaluation categories are subject to a rate of $0.27 per $100 of
deposits. There is no guarantee that the rate of deposit insurance premiums will
not increase in the future.
These assessment rates also reflect the amount the FDIC has determined is
necessary to maintain the reserve ratio of BIF of 1.25% of total insured bank
deposits. The FDIC has announced that this reserve ratio was achieved during
1995. However, due primarily to the fact that the reserve ratio of the FDIC's
Savings Association Insurance Fund ("SAIF") is not projected to reach the
required level of 1.25% for several years, the FDIC has made a proposal to
Congress to (1) capitalize the SAIF through a special up-front cash assessment
on SAIF deposits; (2) spread the responsibility for payment to the Financing
Corporation created under Title III of the Competitive Equality Banking Act of
1987 proportionally over all FDIC-insured institutions; and (3) as soon as
practicable, merge the BIF and the SAIF. On November 14, 1995, the Board of
Directors of the FDIC voted to retain the existing assessment rate schedule
applicable to members of the SAIF for the first half of 1996.
Fleet's subsidiary banks do not hold significant amounts of deposits insured
by the SAIF.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Fleet's consolidated ratios of earnings to fixed charges were as follows for
the years and periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993 1992 1991*
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits...................... 1.78x 2.33x 2.36x 1.90x *
Including Interest on Deposits...................... 1.34 1.62 1.56 1.26 *
</TABLE>
- ------------
* Fixed charges exceeded earnings by $16 million for both the ratio excluding
and including interest on deposits for the year ended December 31, 1991.
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, Fleet
intends to use the net proceeds from the sale of the Securities for general
corporate purposes, principally to extend credit to, or fund investments in, its
subsidiaries. The precise amounts and timing of extensions of credit to, and
investments in, such subsidiaries will depend upon the subsidiaries' funding
requirements and the availability of other funds. Pending such applications, the
net proceeds may be temporarily invested in marketable securities or applied to
the reduction of Fleet's short-term indebtedness. Based upon the historic and
anticipated future growth of Fleet and the financial needs of its subsidiaries,
Fleet may engage in additional financings of a character and amount to be
determined as the need arises.
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either Senior Debt Securities or
Subordinated Debt Securities of Fleet. The Senior Debt Securities will be issued
under an indenture dated as of October 1, 1992 (the "Senior Indenture"), between
Fleet and The First National Bank of Chicago as Senior Trustee (the "Senior
Trustee"). The Subordinated Debt Securities will be issued under an indenture
dated as of October 1, 1992 (as supplemented by a First Supplemental Indenture
dated November 30, 1992, the "Subordinated Indenture"), between Fleet and The
First National Bank of Chicago as Subordinated Trustee (the "Subordinated
Trustee"). The Senior Indenture and Subordinated Indenture are collectively
referred to herein as the "Indentures". A copy of each of the Indentures are
exhibits to the Registration Statement of which this Prospectus forms a part.
The following description of Debt Securities relates to Debt Securities to be
issued in connection with either a United States Offering or an International
Offering, except, in the case of an International Offering, as otherwise
specified in the Prospectus Supplement relating thereto.
The following is a summary of all material terms set forth in the
Indentures. Such summaries do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all the provisions of the
Indentures, including the definitions therein of certain terms. Wherever
particular Sections or defined terms of the Indentures are referred to, it is
intended that such Sections or definitions shall be incorporated herein by
reference. The following sets forth certain general terms and provisions of the
Debt Securities to which any Prospectus Supplement may relate. The particular
terms of the Debt Securities offered by any Prospectus Supplement and the
extent, if any, to which such general provisions may apply to the Debt
Securities so offered, will be described in the Prospectus Supplement relating
to such Offered Securities.
Because Fleet is a holding company, its rights and the rights of its
creditors, including the Holders of the Debt Securities offered hereby, to
participate in the assets of any subsidiary upon the latter's liquidation or
reorganization will be subject to the prior claims of the subsidiary's creditors
except to the extent that Fleet may itself be a creditor with recognized claims
against the subsidiary.
GENERAL
The Debt Securities to be offered by this Prospectus are limited to the
amounts described on the cover of this Prospectus. Fleet expects from time to
time to incur additional indebtedness constituting Senior Indebtedness and Other
Financial Obligations (each as defined in the Subordinated Indenture). The
Indentures, however, do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities may
be issued from time to time in one or more series. The Debt Securities will be
unsecured obligations of Fleet. Neither the Indentures nor the Debt Securities
will limit or otherwise restrict the amount of other indebtedness (including
Other Financial Obligations) which may be incurred or other securities which may
be issued by Fleet or any of its subsidiaries. The Senior Debt Securities will
rank on a parity with all other unsecured unsubordinated indebtedness of Fleet
while the indebtedness represented by the Subordinated Debt Securities will be
subordinated as described below under "Subordinated Debt Securities".
As used herein, Debt Securities shall include securities denominated in U.S.
dollars or, at the option of Fleet if so specified in the applicable Prospectus
Supplement, in any other currency, including composite currencies such as the
ECU. Debt Securities of a series may be issuable in individual registered form
without coupons, in the form of one or more global securities, or, in bearer
form with or without coupons. Such bearer securities will be offered only to
non-United States persons and to offices located outside of the United States of
certain United States financial institutions.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms, where
applicable, of the Debt Securities in respect of which this
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<PAGE>
Prospectus is being delivered: (1) the title of the Debt Securities; (2) the
limit, if any, on the aggregate principal amount or initial public offering
price of the Debt Securities; (3) the priority of payment of such Debt
Securities; (4) the price or prices (which may be expressed as a percentage of
the aggregate principal amount thereof) at which the Debt Securities will be
issued; (5) the date or dates on which the Debt Securities will mature; (6) the
rate or rates (which may be fixed or variable) per annum at which the Debt
Securities will bear interest, if any, or the method of determining the same;
(7) the date from which such interest, if any, on the Debt Securities will
accrue, the date or dates on which such interest, if any, will be payable, the
date on which payment of such interest, if any, will commence and the Regular
Record Dates for such Interest Payment Dates, if any; (8) the extent to which
any of the Debt Securities will be issuable in temporary or permanent global
form and, if so, the identity of the depositary for such global Debt Security,
or the manner in which any interest payable on a temporary or permanent global
Debt Security will be paid; (9) the dates, if any, on which, and the price or
prices at which, the Debt Securities will, pursuant to any mandatory sinking
fund provisions, or may, pursuant to any optional sinking fund or to any
purchase fund provisions, be redeemed by Fleet, and the other detailed terms and
provisions of such sinking and/or purchase funds; (10) the date, if any, after
which, and the price or prices at which, the Debt Securities may, pursuant to
any optional redemption provisions, be redeemed at the option of Fleet or of the
Holder thereof and the other detailed terms and provisions of such optional
redemption; (11) the denomination or denominations in which such Debt Securities
are authorized to be issued; (12) the currency, currencies or units (including
ECU) in which the Debt Securities are denominated, which may be in United States
dollars, a foreign currency or units of two or more foreign currencies; (13) the
currency, currencies or units (including ECU) for which the Debt Securities may
be purchased and in which principal, premium, if any, and interest may be
payable; (14) whether any of the Debt Securities will be issued in bearer form
and, if so, any limitations on issuance of such bearer Debt Securities
(including exchange for registered Debt Securities of the same series); (15)
information with respect to book-entry procedures; (16) whether any of the Debt
Securities will be issued as Original Issue Discount Securities; (17) any index
used to determine the amount of payments of principal of, premium, if any, and
interest on such Debt Securities; (18) each office or agency where, subject to
the terms of the applicable Indenture, such Debt Securities may be presented for
registration of transfer or exchange; (19) whether any of the Debt Securities
will be subject to defeasance in advance of the Redemption Date or Stated
Maturity thereof; (20) whether the subordination provisions summarized below or
different subordination provisions, including a different definition of "Senior
Indebtedness", "Entitled Persons", "Existing Subordinated Indebtedness", or
"Other Financial Obligations", shall apply to the Debt Securities; (21) whether
any of the Debt Securities will be convertible or exchangeable into other
securities of Fleet and the terms of such conversion or exchange, including the
conversion price and applicable conversion or expiration dates and (22) any
other terms of the series (which will not be inconsistent with the provisions of
the applicable Indenture).
Special federal income tax and other considerations relating to Debt
Securities denominated in foreign currencies or units of two or more foreign
currencies will be described in the applicable Prospectus Supplement. In the
event Fleet offers Debt Securities denominated in foreign currencies or units of
two or more foreign currencies, an opinion with respect to tax matters and
consent of counsel will be filed in a Form 8-K or as an amendment to the
Registration Statement of which this Prospectus forms a part.
Debt Securities may be issued as Original Issue Discount Securities (bearing
no interest or interest at a rate which at the time of issuance is below market
rates) to be sold at a substantial discount below their principal amount. In the
event of an acceleration of the maturity of any Original Issue Discount
Security, the amount payable to the Holder of such Original Issue Discount
Security upon such acceleration will be determined in accordance with the
applicable Prospectus Supplement, the terms of such security and the relevant
Indenture, but will be an amount less than the amount payable at the
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<PAGE>
maturity of the principal of such Original Issue Discount Security. Special
federal income tax and other considerations relating thereto will be described
in the applicable Prospectus Supplement.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indentures, however, provide that Fleet may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Debt
Securities issued in bearer form shall have interest coupons attached, unless
issued as zero coupon securities. Debt Securities in bearer form shall not be
offered, sold, resold or delivered in connection with their original issuance in
the United States or to any United States person (as defined below) other than
offices located outside the United States of certain United States financial
institutions. As used above, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States, or any estate or
trust, the income of which is subject to United States federal income taxation
regardless of its source, and "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction. Purchasers of Debt
Securities in bearer form will be subject to certification procedures and may be
affected by certain limitations under United States tax laws. Such procedures
and limitations will be described in the Prospectus Supplement relating to the
offering of the Debt Securities in bearer form.
Debt Securities in registered form may be presented for transfer or exchange
(with form of transfer duly endorsed thereon) for other Debt Securities of the
same series at the offices of the Trustee according to the terms of the
applicable Indenture. In no event, however, will Debt Securities in registered
form be exchangeable for Debt Securities in bearer form. Fleet may designate the
main office of Fleet-RI, 111 Westminster Street, Providence, Rhode Island 02903,
as an office where the transfer of the Debt Securities may be registered.
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities issued in bearer form will be issued in denominations of $10,000 and
$50,000.
Unless otherwise indicated in the applicable Prospectus Supplement, the Debt
Securities issued in fully registered form will be issued without coupons and in
denominations of $1,000 or integral multiples thereof.
No service charge will be made for any transfer or exchange of the Debt
Securities but Fleet may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
PAYMENT AND PLACE OF PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on, Debt Securities in
registered form will be made at the office of the Trustee, except that at the
option of Fleet, interest may be paid by mailing a check to the address of the
person entitled thereto as it appears on the Security Register (Sections 301,
305 and 1002 in the Senior Indenture; Sections 3.01, 3.05 and 5.02 in the
Subordinated Indenture). Fleet may designate the main office of Fleet-RI, 111
Westminster Street, Providence, Rhode Island 02903, as an office where
principal, premium, if any, and interest, if any, may be paid.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on Debt Securities in
bearer form will be made, subject to any applicable laws and regulations, at
such office outside the United States as specified in the applicable Prospectus
Supplement and as Fleet may designate from time to time, at the option of the
Holder, by check or by transfer to an account maintained by the payee with a
bank located outside the United
10
<PAGE>
States. Unless otherwise indicated in the applicable Prospectus Supplement,
payment of interest on Debt Securities in bearer form will be made only against
surrender of the coupon relating to such Interest Payment Date. No payment with
respect to any Debt Security in bearer form will be made at any office or agency
of Fleet in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such series. Global Securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing Debt Securities in definitive form represented thereby,
a Global Security may not be transferred except as a whole by the Depository for
such Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor of such Depository or a nominee of
such successor.
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series.
MODIFICATION AND WAIVER
Each Indenture provides that modifications and amendments thereof may be
made by Fleet and the Trustees with the consent of the Holders of 66 2/3% in
aggregate principal amount of the Outstanding Securities of each series under
such Indenture affected by such modification or amendment; provided, however,
that no such modification or amendment may, without the consent of the Holder of
each Outstanding Security affected thereby, (a) change the stated maturity date
of the principal of, or any installment of principal or interest on, any
Outstanding Security, (b) reduce the principal amount of, the rate of interest
thereon, or any premium payable upon the redemption thereof, (c) reduce the
amount of principal of an Original Issue Discount Security payable upon
acceleration of the maturity thereof, (d) change the place or currency of
payment of principal of, or any premium or interest on, any Outstanding
Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Outstanding Security, or (f) reduce the
percentage in principal amount of Outstanding Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults.
The Holders of 50% in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by Fleet
with certain restrictive provisions of the applicable Indenture. The Holders of
a majority in aggregate principal amount of the Outstanding Securities of each
series may, on behalf of all Holders of Debt Securities of that series, waive
any past default under the applicable Indenture with respect to Debt Securities
of that series, except a default in the payment of principal or any premium or
any interest or in respect of a provision which under the applicable Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of that series affected.
Modification and amendment of the Indentures may be made by Fleet and the
Trustee without the consent of any Holder for any of the following purposes: (i)
to evidence the succession of another Person to Fleet; (ii) to add to the
covenants of Fleet for the benefit of the Holders of all or any series of
Securities; (iii) to add Events of Default; (iv) to add or change any provisions
of any of the Indentures to facilitate the issuance of bearer securities; (v) to
change or eliminate any of the provisions of the applicable Indenture, provided
that any such change or elimination shall become effective only when
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<PAGE>
there is no Outstanding Security of any series which is entitled to the benefit
of such provision; (vi) to establish the form or terms of Securities of any
series; (vii) to evidence and provide for the acceptance of appointment by a
successor Trustee; (viii) to cure any ambiguity, to correct or supplement any
provision in the applicable Indenture, or to make any other provisions with
respect to matters or questions arising under such Indenture, provided such
action shall not adversely affect the interests of Holders of Debt Securities of
any series in any material respect under such Indenture; (ix) to convey,
transfer, assign, mortgage or pledge any property to or with the Trustee or (x)
to provide for conversion rights of the Holders of the Securities of any series
to enable such Holders to convert such Securities into other securities of
Fleet.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise set forth in the applicable Prospectus Supplement, each
Indenture provides that Fleet may consolidate or merge with or into, or transfer
its assets substantially as an entirety to, any corporation organized under the
laws of any domestic jurisdiction, provided that the successor corporation
assumes Fleet's obligations on the Debt Securities under such Indenture, and
that after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing, and that certain other conditions are met.
Neither Indenture provides for any right of acceleration in the event of a
consolidation, merger, sale of all or substantially all of the assets,
recapitalization or change in stock ownership of Fleet. In addition, the
Indentures do not contain any provision which would protect the Holders of Debt
Securities against a sudden and dramatic decline in credit quality resulting
from takeovers, recapitalizations or similar restructurings.
REGARDING THE TRUSTEE
Fleet maintains banking relations with the Trustee. In addition, Fleet's
banking subsidiaries maintain deposit accounts and correspondent banking
relations with the Trustee.
INTERNATIONAL OFFERING
If specified in the applicable Prospectus Supplement, Fleet may issue Debt
Securities in an International Offering. Such Debt Securities may be issued in
bearer form and will be described in the applicable Prospectus Supplement. If
such Debt Securities are Senior Debt Securities, such Debt Securities will be
issued pursuant to a supplement to the Senior Indenture. If Debt Securities are
issued in bearer form, the applicable Prospectus Supplement will contain the
relevant provisions.
In connection with any such International Offering, Fleet will designate
paying agents, registrars or other agents with respect to the Debt Securities,
as specified in the applicable Prospectus Supplement.
Debt Securities issued in an International Offering may be subject to
certain selling restrictions which will be described in the applicable
Prospectus Supplement. Such Debt Securities may be listed on one or more foreign
stock exchanges as described in the applicable Prospectus Supplement. Special
United States tax and other considerations, if any, applicable to an
International Offering will be described in the applicable Prospectus
Supplement.
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<PAGE>
SENIOR DEBT SECURITIES
The Senior Debt Securities will be direct, unsecured obligations of Fleet
and will rank pari passu with all outstanding senior indebtedness of Fleet.
EVENTS OF DEFAULT
The following are Events of Default under the Senior Indenture with respect
to Senior Debt Securities of any series: (a) failure to pay principal of or any
premium on any Senior Debt Security of that series when due; (b) failure to pay
any interest on any Senior Debt Security of that series when due, continued for
30 days; (c) failure to deposit any sinking fund payment, when due, in respect
of any Senior Debt Security of that series; (d) failure to perform any other
covenant of Fleet in the Senior Indenture (other than any covenant included in
the Indenture solely for the benefit of a Series of Debt Securities other than
that Series), continued for 60 days after written notice as provided in the
Senior Indenture; (e) certain events in bankruptcy, insolvency or
reorganization; and (f) any other Event of Default provided with respect to
Senior Debt Securities of that series. (Section 501) If an Event of Default with
respect to Senior Debt Securities of any series at the time outstanding occurs
and is continuing, either the Senior Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series may
declare the principal amount (or, if the Senior Debt Securities of that series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of all the Senior Debt Securities
of that series to be due and payable immediately. At any time after a
declaration of acceleration with respect to Senior Debt Securities of any series
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority in aggregate principal amount of Outstanding
Securities of that series may, on behalf of all Holders of that series, under
certain circumstances, rescind and annul such acceleration. (Section 502)
The Senior Indenture provides that, subject to the duty of the Senior
Trustee during default to act with the required standard of care, the Senior
Trustee will be under no obligation to exercise any of its rights or powers
under the Senior Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Senior Trustee reasonable
indemnity. (Section 603) Subject to such provisions for the indemnification of
the Senior Trustee, the Holders of a majority in aggregate principal amount of
the Outstanding Senior Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceedings for any remedy
available to the Senior Trustee, or exercising any trust or power conferred on
the Senior Trustee, with respect to the Senior Debt Securities of that series.
(Section 512)
No Holder of any Senior Debt Security of any series will have any right to
institute any proceeding with respect to the Senior Indenture or for any remedy
thereunder, unless (a) such Holder shall have previously given to the Senior
Trustee written notice of a continuing Event of Default with respect to Senior
Debt Securities of that series, (b) the Holders of not less than 25% in
aggregate principal amount of the Outstanding Senior Debt Securities of that
series also shall have made written request and offered reasonable indemnity to
the Senior Trustee to institute such proceeding as trustee, (c) the Senior
Trustee shall not have received from the Holders of a majority in principal
amount of the Outstanding Senior Debt Securities of that series a direction
inconsistent with such request and (d) the Senior Trustee shall have failed to
institute such proceeding within 60 days. (Section 507) However, the Holder of
any Senior Debt Security will have an absolute right to receive payment of the
principal of (and premium, if any) and interest, if any, on such Senior Debt
Security on or after the due dates expressed in such Senior Debt Security and to
institute suit for the enforcement of any such payment. (Section 508)
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<PAGE>
Fleet is required to furnish to the Senior Trustee annually a statement as
to performance by Fleet of certain of its obligations under the Indenture and as
to any default in such performance. (Section 1009)
RESTRICTIVE COVENANTS
Disposition of Voting Stock of Certain Subsidiaries. The Senior Indenture
contains a covenant that Fleet will not, and will not permit any Subsidiary (as
defined in the Senior Indenture) to sell, assign, pledge, transfer or otherwise
dispose of, or permit the issuance of any shares of Voting Stock (as defined in
the Senior Indenture) of, or any securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of Voting Stock of, a
Principal Constituent Bank (as defined below) or any Subsidiary which owns
shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of Voting Stock of a Principal Constituent
Bank, provided that dispositions made by Fleet or any Subsidiary (i) acting in a
fiduciary capacity for any person other than Fleet or any Subsidiary or (ii) to
Fleet or any of its wholly-owned (except for directors' qualifying shares)
Subsidiaries, shall not be prohibited. Notwithstanding the limitations described
above, the Senior Indenture provides that Fleet may, and may permit its
Subsidiaries to, sell, assign, pledge, transfer or otherwise dispose of, or
issue such shares or securities (1) if required by law for the qualification of
Directors, (2) for purposes of compliance with an order of a court or regulatory
authority, (3) if in connection with a merger of, or consolidation of, a
Principal Constituent Bank with or into a wholly-owned Subsidiary or a
Constituent Bank (as defined below), provided that Fleet holds, directly or
indirectly, in the entity surviving such merger or consolidation, not less than
the percentage of Voting Stock it held in the Principal Constituent Bank prior
to such action, (4) if such disposition or issuance is for fair market value
(determined by the Board of Directors of Fleet) and, if after giving effect to
such disposition or issuance (and any potential dilution), Fleet and its
wholly-owned Subsidiaries will own directly not less than 80% of the Voting
Stock of such Principal Constituent Bank or Subsidiary, (5) if a Principal
Constituent Bank sells additional shares of Voting Stock to its stockholders at
any price, if, after such sale, Fleet holds directly or indirectly not less than
the percentage of Voting Stock of such Principal Constituent Bank it owned prior
to such sale or (6) if Fleet or a Subsidiary pledges or creates a lien on the
Voting Stock of a Principal Constituent Bank to secure a loan or other extension
of credit by a Constituent Bank subject to Section 23A of the Federal Reserve
Act. A "Constituent Bank" is a Bank which is a Subsidiary. A "Principal
Constituent Bank" is Fleet-RI and any other Constituent Bank designated as a
Principal Constituent Bank. Any designation of a Constituent Bank as a Principal
Constituent Bank with respect to Debt Securities of any series shall remain
effective until the Debt Securities of such series are no longer outstanding. As
of the date of this Prospectus, no Constituent Banks (other than Fleet-RI) have
been designated as Principal Constituent Banks with respect to any series of
Debt Securities.
Limitation Upon Liens on Certain Capital Stock. The Senior Indenture
contains a covenant that Fleet will not at any time, directly or indirectly,
create, assume, incur or suffer to be created, assumed or incurred or to exist
any mortgage, pledge, encumbrance or lien or charge of any kind upon (1) any
shares of capital stock of any Principal Constituent Bank (other than directors'
qualifying shares), or (2) any shares of capital stock of a Subsidiary which
owns capital stock of any Principal Constituent Bank; provided, however, that,
notwithstanding the foregoing, Fleet may incur or suffer to be incurred or to
exist upon such capital stock (a) liens for taxes, assessments or other
governmental charges or levies which are not yet due or are payable without
penalty or of which the amount, applicability or validity is being contested by
Fleet in good faith by appropriate proceedings and Fleet shall have set aside on
its books adequate reserves with respect thereto or (b) the lien of any
judgement, if such judgment shall not have remained undischarged, or unstayed on
appeal or otherwise, for more than 60 days.
DEFEASANCE
Fleet may terminate certain of its obligations under the Senior Indenture
with respect to the Senior Debt Securities of any series on the terms and
subject to the conditions contained in the Senior
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<PAGE>
Indenture, by (a) depositing irrevocably with the Senior Trustee as trust funds
in trust (i) in the case of Senior Debt Securities denominated in a foreign
currency, money in such foreign currency or Foreign Government Obligations (as
defined below) of the foreign government or governments issuing such foreign
currency, or (ii) in the case of Senior Debt Securities denominated in U.S.
dollars, U.S. dollars or U.S. Government Obligations (as defined below), in each
case in an amount which through the payment of interest, principal or premium,
if any, in respect thereof in accordance with their terms will provide (without
any reinvestment of such interest, principal or premium), not later than one
business day before the due date of any payment, money or (iii) a combination of
money and U.S. Government Obligations or Foreign Government Obligations, as
applicable, sufficient to pay the principal of or premium, if any, and interest
on, the Senior Debt Securities of such series as such are due and (b) satisfying
certain other conditions precedent specified in the Senior Indenture. Such
deposit and termination is conditioned among other things upon Fleet's delivery
of (a) an opinion of independent counsel that the Holders of the Senior Debt
Securities of such series will have no federal income tax consequences as a
result of such deposit and termination and (b) if the Senior Debt Securities of
such series are then listed on the New York Stock Exchange, an opinion of
counsel that the Senior Debt Securities of such series will not be delisted as a
result of the exercise of this option. Such termination will not relieve Fleet
of its obligation to pay when due the principal of, and interest on, certain of
the Senior Debt Securities as provided in the Indenture. (Section 403)
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof. "Foreign Government Obligations" means securities denominated in a
Foreign Currency that are (i) direct obligations of a foreign government for the
payment of which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
a foreign government the payment of which is unconditionally guaranteed as a
full faith and credit obligation by such foreign government, which, in either
case, under clauses (i) or (ii) are not callable or redeemable at the option of
the issuer thereof.
SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be direct, unsecured obligations of
Fleet and, unless otherwise specified in the applicable Prospectus Supplement,
will rank pari passu with all outstanding subordinated indebtedness of Fleet.
SUBORDINATION
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Subordinated Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Subordinated Indenture). In certain events of
insolvency, the payment of the principal of and interest on the Subordinated
Debt Securities will, to the extent set forth in the Subordinated Indenture,
also be effectively subordinated in right of payment to the prior payment in
full of all Other Financial Obligations (as defined in the Subordinated
Indenture). Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Indebtedness will first be
entitled to receive payment in full of all amounts due or to become due thereon
before the Holders of the Subordinated Debt Securities will be entitled to
receive any payment in respect of the principal of or interest on the
Subordinated Debt Securities. If upon any such payment or distribution of assets
to creditors, there remain, after giving effect to such subordination provisions
in favor of the holders of Senior Indebtedness, any amounts of cash, property or
securities available for payment or distribution in respect of Subordinated Debt
Securities (as defined in the Subordinated Indenture, "Excess Proceeds")
15
<PAGE>
and if, at such time, any Entitled Persons (as defined in the Subordinated
Indenture) in respect of Other Financial Obligations have not received payment
in full of all amounts due or to become due on or in respect of such Other
Financial Obligations, then such Excess Proceeds shall first be applied to pay
or provide for the payment in full of such Other Financial Obligations before
any payment or distribution may be made in respect of the Subordinated Debt
Securities. In the event of the acceleration of the maturity of any Debt
Securities, the holders of all Senior Indebtedness will first be entitled to
receive payment in full of all amounts due thereon before the Holders of the
Subordinated Debt Securities will be entitled to receive any payment upon the
principal of or interest on the Subordinated Debt Securities.
In addition, no payment may be made of the principal of, premium, if any, or
interest on the Subordinated Debt Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Subordinated Debt
Securities, at any time when (i) there is a default in the payment of the
principal of, premium, if any, interest on or otherwise in respect of any Senior
Indebtedness, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise, or (ii) any event of default with respect to any
Senior Indebtedness has occurred and is continuing, or would occur as a result
of such payment on the Subordinated Debt Securities or any redemption,
retirement, purchase or other acquisition of any of the Subordinated Debt
Securities, permitting the Holders of such Senior Indebtedness (or a trustee on
behalf of the Holders thereof) to accelerate the maturity thereof.
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of Fleet who are not holders
of Senior Indebtedness or of the Subordinated Debt Securities may recover less,
ratably, than Holders of Senior Indebtedness and may recover more, ratably, than
the Holders of the Subordinated Debt Securities. By reason of the obligation of
the Holders of Subordinated Debt Securities to pay over any Excess Proceeds to
Entitled Persons in respect of Other Financial Obligations, in the event of
insolvency, holders of Existing Subordinated Indebtedness (as defined in the
Subordinated Indenture) may recover more, ratably, than the Holders of
Subordinated Debt Securities.
Unless otherwise specified in the Prospectus Supplement relating to the
particular series of Subordinated Debt Securities offered thereby, Senior
Indebtedness is defined in the Subordinated Indenture as (a) the principal of,
premium, if any, and interest on all of Fleet's indebtedness for money borrowed,
whether outstanding on the date of execution of the Subordinated Indenture or
thereafter created, assumed or incurred, except (i) the Existing Subordinated
Indebtedness and other Subordinated Debt Securities issued under the
Subordinated Indenture, (ii) such indebtedness as is by its terms expressly
stated to be junior in right of payment to the Subordinated Debt Securities and
(iii) such indebtedness as is by its terms expressly stated to rank pari passu
with the Subordinated Debt Securities and (b) any deferrals, renewals or
extensions of any such Senior Indebtedness. (Section 1.01). The Term
"indebtedness for money borrowed" when used with respect to Fleet is defined to
include, without limitation, any obligation of, or any obligation guaranteed by,
Fleet for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, and any deferred obligation of,
or any such obligation guaranteed by, Fleet for the payment of the purchase
price of property or assets. (Section 1.01).
Existing Subordinated Indebtedness means Fleet's Subordinated Notes Due
1997, Floating Rate Subordinated Capital Notes Due 1998, 9.90% Subordinated
Notes Due 2001, 9% Subordinated Notes Due 2001, 8 1/8% Subordinated Notes Due
2004 and 8 5/8% Subordinated Notes Due 2007. As of the date of this Prospectus,
Fleet also had outstanding its 7 5/8% Subordinated Notes Due 1999 and 6 7/8%
Subordinated Notes Due 2003, each of which was issued under the Subordinated
Indenture, and its 9.85% Subordinated Capital Notes Due 1999, 8 5/8%
Subordinated Notes due 1999 and 7.20% Subordinated Notes due 2003, each of which
was issued under indentures assumed by Fleet in connection with the Shawmut
Merger and all of which are junior in right of payment to all of Fleet's Senior
Indebtedness and Other Financial Obligations.
Unless otherwise specified in the Prospectus Supplement relating to the
particular series of Subordinated Debt Securities offered thereby, Other
Financial Obligations means all obligations of
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<PAGE>
Fleet to make payment pursuant to the terms of financial instruments, such as
(i) securities contracts and foreign currency exchange contracts, (ii)
derivative instruments, such as swap agreements (including interest rate and
foreign exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange rate agreements, options,
commodity futures contracts, commodity option contracts and (iii) in the case of
both (i) and (ii) above, similar financial instruments, other than (A)
obligations on account of Senior Indebtedness and (B) obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
Subordinated Debt Securities. Unless otherwise specified in the Prospectus
Supplement relating to the particular series of Subordinated Debt Securities
offered thereby, Entitled Persons means any person who is entitled to payment
pursuant to the terms of Other Financial Obligations.
Any Prospectus Supplement relating to a particular series of Subordinated
Debt Securities will set forth the aggregate amount of indebtedness of Fleet
senior to the Subordinated Debt Securities as of a recent practicable date.
Fleet's obligations under the Subordinated Debt Securities shall rank pari
passu in right of payment with each other and with the Existing Subordinated
Indebtedness, subject to the obligations of the Holders of Subordinated Debt
Securities to pay over any Excess Proceeds to Entitled Persons in respect of
Other Financial Obligations as provided in the Subordinated Indenture.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness or Other Financial Obligations, which may include
indebtedness that is senior to the Subordinated Debt Securities, but subordinate
to other obligations of Fleet.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
Except as described above or in the Subordinated Indenture, the obligation
of Fleet to make payment of the principal of, premium, if any, or interest on
the Subordinated Debt Securities will not be affected by reason of such
subordination. In the event of a distribution of assets upon any dissolution,
winding up, liquidation or reorganization, certain general creditors of Fleet
may recover more, ratably, than Holders of the Subordinated Debt Securities.
Subject to payment in full of all Senior Indebtedness, the rights of the Holders
of Subordinated Debt Securities will be subrogated to the rights of the Holders
of Senior Indebtedness to receive payments or distribution of cash, property or
securities of Fleet applicable to Senior Indebtedness. Subject to the payment in
full of all Other Financial Obligations, the rights of the Holders of
Subordinated Debt Securities will be subrogated to the rights of Entitled
Persons to receive payments or distributions of cash, property or securities of
Fleet applicable to Other Financial Obligations. (Sections 14.02 and 14.10)
LIMITED RIGHTS OF ACCELERATION
Unless otherwise specified in the Prospectus Supplement relating to any
series of Subordinated Debt Securities, payment of principal of the Subordinated
Debt Securities may be accelerated only in case of certain events involving the
bankruptcy, insolvency or reorganization of Fleet which constitutes an Event of
Default (as defined below). There is no right of acceleration in the case of a
default in the payment of principal of, premium, if any, or interest on the
Subordinated Debt Securities or the performance of any other covenant of Fleet
in the Subordinated Indenture.
RESTRICTIVE COVENANTS
The Prospectus Supplement relating to a series of Subordinated Debt
Securities may describe certain restrictive covenants, if any, to which Fleet
may be bound under the Subordinated Indenture.
EVENTS OF DEFAULT, DEFAULTS, WAIVERS
An "Event of Default" with respect to Subordinated Debt Securities of any
series is defined in the Subordinated Indenture as certain events involving the
bankruptcy or reorganization of Fleet and any other Event of Default provided
with respect to Subordinated Debt Securities of such series. (Section
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<PAGE>
7.01) A "Default" with respect to Subordinated Debt Securities of any series is
defined in the Subordinated Indenture as (a) an Event of Default with respect to
such series; (b) failure to pay the principal of, or premium, if any, on any
Subordinated Security of such series at its Maturity; (c) failure to pay
interest upon any Subordinated Security of such series when due and payable and
the continuance of such Default for a period of 30 days; (d) failure to perform
any other covenant or agreement of Fleet in the Subordinated Indenture with
respect to Subordinated Debt Securities of such series and continuance of such
Default for 60 days after written notice of such failure, requiring Fleet to
remedy the same; and (e) any other Default provided with respect to Subordinated
Debt Securities of such series. (Section 7.07) If an Event of Default with
respect to any series of Subordinated Debt Securities for which there are
Subordinated Debt Securities outstanding under the Subordinated Indenture occurs
and is continuing, either the Subordinated Trustee or the Holders of not less
than 25% in aggregate principal amount of the Subordinated Debt Securities of
such series may declare the principal amount (or if such Subordinated Debt
Securities are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all Subordinated Debt
Securities of that series to be immediately due and payable. The Holders of a
majority in aggregate principal amount of the Subordinated Debt Securities of
any series outstanding under the Subordinated Indenture may waive, on behalf of
all Holders of such series, an Event of Default resulting in acceleration of
such Subordinated Debt Securities, but only if all Defaults have been remedied
and all payments due (other than those due as a result of acceleration) have
been made. (Section 7.02) If a Default occurs and is continuing, the
Subordinated Trustee may in its discretion, and at the written request of
Holders of not less than a majority in aggregate principal amount of the
Subordinated Debt Securities of any series outstanding under the Subordinated
Indenture and upon reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and subject to
certain other conditions set forth in the Subordinated Indenture shall, proceed
to protect the rights of the Holders of all the Subordinated Debt Securities of
such series. (Section 7.03) Prior to acceleration of maturity of the
Subordinated Debt Securities of any series outstanding under the Subordinated
Indenture, the Holders of a majority in aggregate principal amount of such
Subordinated Debt Securities may waive any past Default under the Subordinated
Indenture except a Default in the payment of principal of, premium, if any, or
interest on the Subordinated Debt Securities of such series or in respect of a
covenant which cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected. (Section 7.13)
The Subordinated Indenture provides that in the event of a Default specified
in clauses (b) or (c) of the immediately preceding paragraph in payment of
principal of, premium, if any, or interest on any Subordinated Debt Security of
any series, Fleet will, upon demand of the Subordinated Trustee, pay to it, for
the benefit of the holder of any such Subordinated Debt Security, the whole
amount then due and payable on such Subordinated Debt Security for principal,
premium, if any, and interest. The Subordinated Indenture further provides that
if Fleet fails to pay such amount forthwith upon such demand, the Subordinated
Trustee may, among other things, institute a judicial proceeding for the
collection thereof. (Section 7.03)
The Subordinated Indenture also provides that notwithstanding any other
provision of the Subordinated Indenture, the holder of any Subordinated Debt
Security of any series shall have the right to institute suit for the
enforcement of any payment of principal of, premium, if any, and interest on
such Subordinated Debt Security on the respective Stated Maturities (as defined
in the Subordinated Indenture) expressed in such Subordinated Debt Security and
that such right shall not be impaired without the consent of such holder.
(Section 7.08)
Fleet is required to furnish to the Subordinated Trustee annually a
statement as to performance by Fleet of certain of its obligations under the
Subordinated Indenture and as to any Default in such performance. (Section 5.10)
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<PAGE>
DESCRIPTION OF WARRANTS
Fleet may issue Warrants for the purchase of Debt Securities. Warrants may
be issued independently or together with Debt Securities offered by any
Prospectus Supplement and may be attached to or separate from any such
Securities. Each series of Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between Fleet and a bank or
trust company, as warrant agent (the "Warrant Agent"). The Warrant Agent will
act solely as an agent of the Company in connection with the Warrants and will
not assume any obligation or relationship of agency or trust for or with any
holders or beneficial owners of Warrants. The following summary of certain
provisions of the Warrants does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the Warrant
Agreement that will be filed with the Commission in connection with the offering
of such Warrants.
The Prospectus Supplement relating to a particular issue of Warrants will
describe the terms of such Warrants, including the following: (a) the title of
such Warrants; (b) the offering price for such Warrants, if any; (c) the
aggregate number of such Warrants; (d) the designation and terms of the Debt
Securities purchasable upon exercise of such Warrants; (e) if applicable, the
designation and terms of the Debt Securities with which such Warrants are issued
and the number of such Warrants issued with each such Debt Security; (f) if
applicable, the date from and after which such Warrants and any Debt Securities
issued therewith will be separately transferable; (g) the principal amount of
Debt Securities purchasable upon exercise of a Warrant and the price at which
such principal amount of Debt Securities may be purchased upon exercise (which
price may be payable in cash, securities, or other property); (h) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire; (i) if applicable, the minimum or maximum amount of
such Warrants that may be exercised at any one time; (j) whether the Warrants
represented by the Warrant certificates or Debt Securities that may be issued
upon exercise of the Warrants will be issued in registered or bearer form; (k)
information with respect to book-entry procedures, if any; (l) the currency or
currency units in which the offering price, if any, and the exercise price are
payable; (m) if applicable, a discussion of material United States Federal
income tax considerations; (n) the antidilution provisions of such Warrants, if
any; (o) the redemption or call provisions, if any, applicable to such Warrants;
and (p) any additional terms of the Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of such Warrants.
19
<PAGE>
PLAN OF DISTRIBUTION
Fleet may sell Securities to or through underwriters, and also may sell
Securities through agents (which are registered broker-dealers or banks) which
may be affiliates.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities. Certain
restrictions relating to the distribution of Securities in connection with an
International Offering will be set forth in the applicable Prospectus
Supplement.
In connection with the sale of Securities, underwriters or agents acting on
Fleet's behalf may receive compensation from Fleet or from purchasers of
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers and agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Act and any discounts or commissions received by them and any profits
on the resale of Securities by them may be deemed to be underwriting discounts
and commissions under the Act. Any such underwriter will be identified and any
such compensation will be described in the applicable Prospectus Supplement.
Under agreements which may be entered into by Fleet, underwriters, dealers
and agents who participate in the distribution of Securities may be entitled to
indemnification by Fleet against certain liabilities, including liabilities
under the Act, and to certain rights of contribution from Fleet.
If so indicated in the applicable Prospectus Supplement, Fleet will
authorize underwriters or other persons acting as Fleet's agents to solicit
offers by certain institutions to purchase Debt Securities or Warrants from
Fleet pursuant to delayed delivery contracts providing for payment and delivery
on a future date or dates stated in the applicable Prospectus Supplement. Each
such contract will be for an amount not less than, and the aggregate amount of
such securities sold pursuant to such contracts shall not be less nor more than,
the respective amounts stated in the applicable Prospectus Supplement.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by Fleet. The obligations of any purchaser under
any such contract will not be subject to any condition except that (1) the
purchase of the Debt Securities or Warrants shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject, and (2) if the Debt Securities or Warrants are also being sold to
underwriters acting as principals for their own account, the underwriters shall
have purchased such Debt Securities or Warrants not sold for delayed delivery.
The underwriters and such other persons will not have any responsibility in
respect of the validity or performance of such contracts.
Certain of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services, for, Fleet
or one or more of its affiliates in the ordinary course of business.
EXPERTS
The consolidated financial statements of Fleet appearing in Fleet's Current
Report on Form 8-K dated March 15, 1996, incorporated by reference herein (and
elsewhere in the Registration Statement) have been incorporated by reference
herein (and elsewhere in the Registration Statement) in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP refers to changes in the methods of accounting for mortgage
servicing rights, investments in debt and equity securities, and income taxes.
20
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The consolidated financial statements of National Westminster Bancorp, Inc.
appearing in Fleet's Current Report on Form 8-K dated February 8, 1996,
incorporated by reference herein, have been incorporated by reference herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP refers to changes in the methods
of accounting for investments and accounting for postretirement benefits other
than pensions.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for Fleet by
Edwards & Angell, One Hospital Trust Plaza, Providence, Rhode Island 02903, and
for the Underwriters by Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019. V. Duncan Johnson, a partner of Edwards & Angell, is a director
of Fleet-RI, Fleet-CT, Fleet-MA, FNB-CT and FNB-MA, and beneficially owns 4,052
shares of Common Stock.
21
<PAGE>
No dealer, salesperson or other person $300,000,000
has been authorized to give any
information or to make any represen-
tations not contained in this Prospectus [Fleet Logo]
Supplement or the Prospectus and, if Financial Group
given or made, such information or represen-
tation must not be relied upon as having FLEET FINANCIAL
been authorized by the Company or the GROUP, INC.
Underwriters. This Prospectus Supplement
and the Prospectus do not constitute
an offer to sell or a solicitation of an
offer to buy any of the securities offered 7+1/8% SUBORDINATED NOTES
hereby in any jurisdiction to any person to DUE APRIL 15, 2006
whom it is unlawful to make such offer in
such jurisdiction. Neither the delivery of
this Prospectus Supplement or the Prospectus
nor any sale made hereunder shall, under any
circumstances, create any implication that
the information herein is correct as of any
time subsequent to the date hereof or that
there has been no change in the affairs of
the Company since such date.
----------------
----------------
PROSPECTUS SUPPLEMENT
April 10, 1996
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGES
-----
Incorporation of Certain Documents by
Reference............................ S-2
Fleet Financial Group, Inc........... S-2
Use of Proceeds...................... S-3
Recent Developments.................. S-3
Selected Consolidated Financial
Data................................. S-7
Unaudited Pro Forma Combined
Financial Statements................ S-9
Notes to Unaudited Pro Forma Combined
Financial Statements................ S-15
Description of Subordinated Notes.... S-17
Underwriting......................... S-19
Experts.............................. S-20
PROSPECTUS
Available Information................ 2 UBS SECURITIES LLC
Incorporation of Certain Documents by
Reference............................ 2 CHASE SECURITIES INC.
Fleet Financial Group, Inc........... 3
Consolidated Ratios of Earnings to MERRILL LYNCH & CO.
Fixed Charges........................ 7
Use of Proceeds...................... 7 SALOMON BROTHERS INC
Description of Debt Securities....... 8
Senior Debt Securities............... 13
Subordinated Debt Securities......... 15
Description of Warrants.............. 19
Plan of Distribution................. 20
Experts.............................. 20
Legal Opinions....................... 21
