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3.28.2000 00:23:00

Glitches hindered Sovereign conversion

By TIMOTHY C. BARMANN Journal Staff Writer

PROVIDENCE -- Sovereign Bank New England officials said yesterday it had successfully taken over 800,000 former BankBoston accounts, including those of 120,000 customers in Rhode Island.

But a number of customers reported having problems with Sovereign ATMs, with its Internet banking service, and in some cases, with funds not showing up in their accounts.

Sovereign acknowledged that a programming problem temporarily shut out some customers at its 87 Rhode Island ATM machines.

Sovereign yesterday took over the accounts of BankBoston customers in Rhode Island, Connecticut and western Massachusetts in the first phase of a massive sell-off of branches by FleetBoston Financial Corp.

Federal regulators required Fleet to divest the branches to win approval of its acquisition of BankBoston, creating the largest bank in New England that dwarfed all its rivals. The divestiture of 285 branches throughout New England is the largest in U.S. history.

Yesterday morning, after spending the weekend converting accounts, Sovereign opened for business in Rhode Island. The bank took over 48 former BankBoston branches, and 87 ATMs. It also took over 37 branches in Connecticut, and 4 in Springfield, Mass.

Some customers said that the transition wasn't as smooth as Sovereign promised it would be.

``It's terrible,'' said Mike Dalessio, of Barrington, who said a teller told him that his account had only $62, even though his passbook showed he had $219. He wasn't able to cash a $100 check because he was told there were insufficient funds.

He said a teller gave him a phone number to call, but no one answered at that number. ``There doesn't seem to be anywhere to turn.''

Paul Goscinski, of South Kingstown, said Sovereign's NetBanking service wouldn't allow him to log in yesterday afternoon. He said he called Sovereign and was told the system was having problems and that he should keep trying.

``I guess I'll call them back again,'' he said. ``Right now, I can't do any online banking, and that's everything for me.''

One customer who didn't want to be identified said that two certificates of deposit she had with BankBoston were mistakenly transferred to FleetBoston instead of Sovereign.

``It's unconscionable to remove something from the bank that I'm in without my permission,'' the woman said.

John O'Connell, of Warwick, said when he checked an ATM yesterday morning, his balances on his savings accounts showed zero.

``They don't have any of my money,'' he said, standing outside the Sovereign branch on Post Road in Warwick. ``This is the most screwed-up thing I've ever seen.''

Many other customers reported no trouble getting access to their money. But some had to wait an hour or more to see a teller. Michelle Towne, of West Kingston, said it took about 1 hour and 45 minutes to make her way through the teller line at the Post Road branch.

Joseph P. Campanelli, president and chief operating officer of Sovereign Bank New England, said the bank did identify a problem with its ATM software that was rejecting customer passwords that were longer than four digits.

Campanelli said the bank posted temporary signs in front of all ATM machines yesterday afternoon informing customers to use only the first four digits of their passwords. He said he was ``hopeful'' the software could be reprogrammed by today.

Jay Sidhu, president and chief executive officer of the bank's parent company, Sovereign Bancorp, of Pennsylvania, told The Journal that there was a problem with the company's customer-service voice-mail line where customers would only get a busy signal. That problem was fixed by 1 p.m. yesterday, he said.

Campanelli said any problems customers were experiencing were limited, and that there were no major systematic problems with the conversion.

``We know that across the board, we've got thousands of customers that have been transferred. We went through and validated that over the weekend,'' he said.

At a morning news conference at the new Rhode Island headquarters on Westminster Street, Providence, Sidhu said he used the ATM himself -- at his daughter's urging -- to make sure it was working.

``I'm delighted to share with you that all systems are up,'' he said.

It was a massive undertaking. Hundreds of FleetBoston employees worked through the weekend to transfer computer files to Sovereign, FleetBoston said in a statement.

Altogether, Sovereign Bancorp, the parent company, is buying 285 Fleet and BankBoston branches throughout New England along with $12 billion in customer deposits.

The branch sale was required by federal regulators as a way to preserve competition after the merger that created FleetBoston.

It is the first part of a three-phase transfer. Sovereign plans to acquire 196 Fleet Bank branches in Massachusetts, on June 19 and July 24.

Once the conversion is complete, Sovereign will become the third-largest bank in New England, after FleetBoston and Citizens Financial Group., and the 27th-largest in the United States, the bank said.

Sovereign officials said the bank's entry in Rhode Island is good for Rhode Island, bringing competition and choice.

``We're not firing anybody, not downsizing anybody, but building,'' said John Hamill, chairman and chief executive officer of Sovereign Bank New England. ``So this is a very positive step.''

Missy Orlando, chief marketing officer for Sovereign, said the bank has requested that Providence officials rename ``BankBoston Plaza,'' where the 27-story Rhode Island headquarters is located on Westminster Street, to Sovereign Bank Plaza. It was only about two years ago the small brick park was named BankBoston Plaza, after years of being Hospital Trust Plaza.

With reports from staff photographer Andrew Dickerman and staff writer Lynn Arditi.

Copyright ) 2000 The Providence Journal Company Produced by www.projo.com

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-- (Dee360Degree@aol.com), March 28, 2000