People\'s United Bank Topic Using Information Proxy

People's United Bank

Topic Using information proxy statement People's United Bank, New England Evaluate monitoring potential firm's Board Directors Identify strengths weaknesses board structured, ethical concerns People's

The People's United Bank, New England:

Evaluating the monitoring potential of the firm's Board of Directors, strengths and weaknesses of how the board is structured, and ethical concerns

The People's United Bank of New England offers conventional consumer banking. It also offers brokerage, financial advisory services, investment management services and life insurance through People's Securities, Inc.; equipment financing through People's Capital and Leasing Corp. And People's United Equipment Finance Corp; and other insurance services through the People's United Insurance Agency (About, 2011, People's United). It is not unusual for a bank to offer a wide range of financial services today. In 1933, the Glass-Steagall Act forced a separation between the commercial banking and financial services industry, but the Act was repealed in 1999. Glass-Steagall was enacted in the wake of the Great Depression, which was partially caused by rampant speculation and the sale by self-interested banks of paper assets that were worthless to many ordinary consumers. Since the repeal, "consequently, the distinction between commercial banks and brokerage firms has blurred; many banks own brokerage firms and provide investment services" (Glass-Steagall, 2011, Investopedia).

To avoid apparent conflicts of interests, The People's United evidently splits its other financial operations from its commercial banking, as manifested in the creation of different companies under the People's United umbrella. But through its commercial banking branches it sells many financial instruments that have a direct impact upon other aspects of the company, particularly its dealings in the financial industry and the insurance industry. Within its commercial banking sector, People's United boasts that it sells commercial and home equity loans as well as mortgages. These types of assets were 'bundled' and sold on the open market during the 2008 financial crisis, and insurance upon such assets was also sold, causing the crisis to spread to the insurance industry as well as to the banking and construction sector. The company advertises the potentially biased, close relationship between the different facets of the company an asset, not a problem for investors because it offers 'on stop shopping.' "Our clients appreciate the fact that they can call one person and know that their needs will be addressed," (2010 Annual report, 2011, People's United).

The bank's parent company is a publically-traded firm: "In April 2007, People's United Financial, Inc., the bank's parent company, completed the conversion from a mutual holding company structure to a full publicly-owned stock company" (About, 2011, People's United). An overview of its corporate leadership reveals that the company is not segmented into discretely-governed categories of commercial banking and financial services, and instead boasts leadership only over general banking services across all sectors. Perhaps even more surprising is the fact that most members of the Board of Directors hold dual offices, such as the general Executive Vice President who is also the Chief Credit Officer and the Senior Executive Vice President who is also in the Chief Risk Officer. Other positions include Executive Vice Presidents in charge of Retail and Commercial Banking. The only segmentation of leadership is that of the officials in charge of regional banking. There are no specific leadership segments of the bank pertaining to financial services or commercial banking isolated from oversight of the bank's general services. Most VPs are in charge of the bank in general, as well as the health of a specific sector.