CT Banking Committee Members 'Concerned' Over Merger Impact

HARTFORD, CT — Two high-ranking legislative Banking Committee members from both sides of the political aisle on Friday expressed "concerns" over the announced takeover of United Bank by People's United Bank.

State Reps. Jason Doucette (D–Glastonbury/Manchester) and Tom Delnicki (R–South Windsor) recently submitted comments and concerns to the Commissioner of the state Department of Banking regarding the merger, a deal valued at an estimated $759 million.

Doucette, serves as the acting chairman of the legislature’s Banking Committee and Delnicki, is a ranking member of the Banking Committee.

The legislators said while the merger would "help People’s United Bank increase its presence in the Connecticut and Massachusetts markets and reduce overhead costs," they are worried it will have "adverse economic impacts in eastern Hartford County due to the high saturation of the two banks in the area."

There are 42 People’s United Bank branches and 37 United Bank locationsin Hartford County.

There are 15 United Bank branches in South Windsor, South Glastonbury, Glastonbury and Manchester, while there are seven People’s United Bank branches.

"This merger has potential to decrease regional competition and eliminate branch locations and jobs,” Doucette said. "We support the growth of Connecticut’s banking industry, but we have an obligation to our districts and the community as a whole to express our concerns over how this merger may impact communities east of the Connecticut River. We ask that these two banking institutions work to mitigate potential consequences."

Said Delnicki, "I am very concerned over this. "This merger will have a tremendous impact in my district, not only from the standpoint of people who utilize these two banks but also the people that work there. We are reaching a crisis situation in community banking — or lack thereof. We must take action in the next session to address this issue."

The legislators said People’s United Bank and United Bank (a merger involving the former Rockville Bank), rank second and fourth, respectively, in Hartford County in terms of deposit market share among depository institutions, yielding a resulting Herfindahl-Hirschman Index calculation of 2,799.

After the merger, the figure is projected to increase 152 points, they said.

The HHI Index number is a calculation used to determine market saturation. Values greater than 2,500 indicate a high level of concentration.

Generally, when the HHI Index number increases between 100 and 200 points, concerns over competitiveness often arise, warranting scrutiny by regulatory authorities, the legislators said.

"With decreased competitiveness and an agency’s increased market power, prices for consumers could increase and consumer choice could decrease," they said.