Banker & Tradesman file photo
An activist investor has called for Eastern Bank to put itself up for sale and is threatening a proxy fight to install allies on the bank’s board of directors.
HoldCo Asset Management, which reportedly has a 3 percent stake in the bank, is pushing for the sale according to Reuters, with M&T Bank being named in the report a potential acquirer.
M&T CEO René Jones and Eastern Bank CEO Bob Rivers recently touted their strong relationship and shared history at a Boston College Chief Executives Club event last month in Boston, and the much larger, Buffalo-based bank already has a sizable presence in New England thanks to its 2022 acquisition of Peoples United Bank.
“Nothing would please us more than a consensual resolution, but a proxy contest and any and all other options are on the table,” HoldCo founders Vik Ghei and Misha Zaitzeff said in documents seen by Reuters.
Eastern Bank Executive Chair Bob Rivers and four other board members are seeking election to new terms on the 15-member board this year.
HoldCo appears angered by the recent mergers that Eastern Bank has made. The company argues that Eastern’s purchases of Century Bank, Cambridge Trust and its pending acquisition of HarborOne Bank have hurt shareholders and spent much of the cash it built up during its IPO.
“Had Eastern refrained from M&A and Securities Restructurings, it would conservatively have $13.90 per share of excess capital today versus a stock price of $17,” the document said per Reuters, adding “meaning that paying a special dividend today would allow shareholders to basically own this bank for free.”
Those same deals left with the largest banking franchise based in Massachusetts, however. Eastern has more than 100 branches in Massachusetts, New Hampshire, Rhode Island and Connecticut. As of June 30, Eastern had approximately $25.5 billion in assets and a market capitalization of $3.8 billion.
Eastern Bank did not respond to requests for comments as of publication time.
Eastern isn’t the first local bank to fall into HoldCo’s crosshairs. The hedge fund specializes in financial institutions and dogged Berkshire Bank executives after the bank replaced its CEO instead of selling itself in 2022 after taking a $500 million “goodwill impairment charge” and challenged Boston Private Bank & Trust’s decision to sell itself to the former Silicon Valley Bank, claiming it could have achieved a higher price.
