chapter  3
40 Pages

Employees, Stockholders, and Corporate Governance

North Fork Bancorp: Getting Rich by Selling the Bank (and Selling Out the Employees)

North Fork Bancorporation, Inc., a regional bank holding company, started on the North Fork of eastern Long Island, was acquired by Capital One Financial Corporation, which operates as the holding company for North Fork Bank.1 Prior to its acquisition, North Fork had more than doubled its total assets, expanding its operation to include the New York metropolitan area and becoming one of the 20 largest banking organizations in the United States.2 John Kanas, then president of North Fork Bancorp, and the board of directors had a difficult decision to make when approached by Capital One to sell the bank. Should they sell to Capital One, which would net their stockholders a 20+ percent increase in the value of their stock, or should they forgo this sale and continue to follow their strategic plan? Kanas believed the acquisition by Capital One would result in layoffs at North Fork, largely amongst the ranks of the bank’s 1,300 back-office staff. “Not all are going to get eliminated,” he said.3