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Merged Citizens, U.S. Trust Drop Free Checking Option

By Laura McGrath Moulton

Banking options for students have grown slimmer after this winter’s round of mergers and acquisitions in the banking world. In October, BankBoston and Fleet Bank merged to form FleetBoston. More recently, Citizens Financial Group acquired U.S. Trust Boston, a development that will end the days of free checking for students.

Few students are pleased by the recent wave of mergers or the imposition of an $11 monthly fee.

“Mergers make rich people richer,” said Jon M. Robinson ’01.

Caroline C. Hon ’01, who chose U.S. Trust for its free checking and savings accounts, describes herself as “pretty disgruntled.”

“I don’t know if it’s because of the merger, but [U.S. Trust is] disorganized right now. I haven’t received a statement since the summer,” Hon said.

Other students are less bothered by these changes. “My main bank is still back home. I have exactly one dollar in U.S. Trust,” said Kenneth J. Overgard ’01. He added that he would not be keeping his account. “I’d better not, lest my balance go to $-11.”

Changes for U.S. Trust Customers

U.S. Trust, which billed itself as “the other big bank” in Boston, elicited enthusiasm among students with its free checking accounts. Prior to the merger, U.S. Trust account holders paid no fees for their checking and savings accounts regardless of balances, and they were not subject to transaction or ATM fees.

According to U.S. Trust Customer Service, Citizens Bank will grant free checking to former U.S. Trust account holders for approximately one year before instituting a fee. For a standard flat-fee checking account with no minimum balance in Massachusetts, that fee is $11 per month, according to Citizens Bank Customer Service.

The bank charges an additional $20 a year for Overdraft protection. As a result of its participation in the “surcharge free SUM program” for ATMs, the Citizens Bank web site reported that Citizens “will both honor the U.S. Trust commitment [to no-fee ATM use] and add over 470 [ATM] machines to the network in Massachusetts.”

The merger began in June 1999 and was finalized on January 11, 2000. Citizens acquired U.S. Trust Corporation for $1.4 billion, or $32 per share.

“From day one, there has been enormous trust and confidence between our colleagues at Citizens Bank and U.S. Trust. I have no doubt that the bank we built and the customers we have been dedicated to serving at U.S. Trust are in the best possible hands. I look forward to playing a role in the continued growth of Citizens,” said President of U.S. Trust Corporation Neal F. Finnegan in a press release following the merger.

Citizens Financial Group, Inc., owned by the Royal Bank of Scotland plc, was a $19.8 billion bank holding company with 279 branches before acquiring U.S. Trust Corporation, a $6 billion commercial bank holding company with 85 banking offices in eastern Massachusetts.

BankBoston, Fleet Also Merge

BankBoston, itself the product of a previous merger between BayBank and Bank of Boston, merged with Fleet Bank to form FleetBoston Financial in October 1999. FleetBoston Financial has 20 million customers worldwide and $185 billion in assets, according to its web site, which makes it the eighth largest bank in the nation.

The only tangible result of the merger for customers has been the ability to use Fleet and BankBoston ATMs interchangeably. FleetBoston says that it will announce a “full suite of products and services” and a complementary “pricing program” in the next few months.

Currently, BankBoston charges $7 per month for a Student Value Checking Account, which includes a Companion Savings Account and ATM card. That charge drops to $4 if all banking is done by telephone, ATM, or computer.

Fleet charges $7 a month for a Self-Service checking account. That fee drops to $5 for Direct-Deposit; a fee of $2 applies to transactions at Fleet branches which require the help of a staff member.