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Report: Former CEO Of Failing BNE Got $590,000 Severance

December 6, 1991

HARTFORD, Conn. (AP) _ Walter J. Connolly Jr., fired last year from the helm of Bank of New England as it tumbled into financial ruin, left with a severance payment worth more than half a million dollars, according to a published report.

The Hartford Courant reported in Friday’s editions that Connolly, former chief executive officer and chairman of BNE, received a $590,000 severance in several payments during 1990.

After he was fired, he also began receiving a pension of about $90,000 a year and continues to receive it, sources told the newspaper.

The fall of Bank of New England, whose subsidiaries were seized by the federal government 11 months ago, left thousands of stockholders with worthless shares and resulted in the layoff of thousands of employees.

The failure is expected to cost the Federal Deposit Insurance Corp. as much as $2.5 billion to cover deposits and other costs.

But government and banking sources said that contrary to rumors, Connolly received no inordinately large severance payment. In fact, they said Connolly received a relatively modest severance package, the newspaper reported.

″We didn’t let them walk out of there with anything that could be construed as a parachute,″ said Thomas E. Cimeno, senior vice president for bank supervision at the Federal Reserve Bank of Boston. ″We were concerned about protecting the (Federal Deposit Insurance Corp.) fund.″

″The idea that we went by was that they would receive their (severance) payments over time because the future of the bank was in jeopardy,″ Cimeno said.

Connolly, 63, who now lives on Cape Cod in Massachusetts, declined to comment, other than to confirm Cimeno’s statement that he had received no special severance award and that any payments were made to him over time.

Connolly shattered the stereotypical image of bankers who are stodgy and conservative. He made himself visible, talking often with the press and becoming active in political and civic affairs in Hartford and Boston.

He became a force in New England banking and politics, making friends with governors, senators and industry powerbrokers.

But Wednesday, Connolly was subdued.

″I’m afraid at this time I don’t have any comment at all to make about my personal affairs,″ he said. ″I’m sorry but I’d prefer not to.″

The bulk of his retirement package was supposed to include an additional $336,679-a-year payment from a special retirement plan for executives.

But that money has been held up in BNE’s complex bankruptcy case, the published report said, quoting unidentified sources.

Bank of New England’s creditors are seeking $800 million while assets available to meet those claims could be as little as $50 million. Connolly’s claim for his money is well down the list for repayment.

Ever since Connolly was fired, Hartford and Boston have been rife with rumors that he was given a multimillion-dollar ″golden handshake.″

The rumors have been fueled by lingering bitterness over the fate of BNE and the lives of employees, retirees and others with a stake in the company. The collapse was New England’s largest bank failure.

The target of the most wrath has been Connolly, a former chairman at Connecticut Bank and Trust who engineered that bank’s merger with Bank of New England in 1985.

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