Big changes, tough times in Charlotte

During more prosperous times, Charlotte's big banks played an outsized role in the city's success, creating jobs, seeding civic projects and topping the skyline.

Now, with the economy flailing, they're playing a major role in its troubles.

On the verge of collapse last fall, Wachovia Corp. sold itself to San Francisco-based Wells Fargo & Co. The takeover has meant the loss of a Fortune 500 company headquarters for Charlotte and still unfolding layoffs.

A few blocks up Tryon Street, Bank of America Corp. looked like a stronger player, agreeing last fall to buy Merrill Lynch & Co. as the fabled brokerage struggled for survival. The deal, however, has resulted in job cuts in Charlotte and the need for additional government assistance.

Counting the banks' job cuts and losses at other firms, the Charlotte metro area had 56,300 finance and insurance jobs in July, down 2,800 from December. The ultimate job fallout is still to be determined but the losses are likely to grow. Before the cuts, the banks employed more than 35,000 here.

As the city's banks gobbled up competitors around the country, they brought prestige and recognition to Charlotte as a New South powerhouse. Now, along with the financial industry as a whole, the city's reputation has taken some lumps.

Both banks, however, have said they remain committed to the city, and experts say Charlotte remains attractive to them because of the talented workforce and low cost of living.

“Our ego will be crushed, but that's about as far as it will go,” says Charlotte Chamber research vice president Tony Crumbley. “They can't operate anywhere else any more cheaply.”

Many of Wachovia's top executives have departed, and Wells Fargo's headquarters remain firmly rooted in San Francisco. But Wells has made Charlotte its headquarters for East Coast banking and kept key wealth management and investment banking executives here.

On a visit to Charlotte in June, Wells chief executive John Stumpf took time to meet with retired Bank of America CEO Hugh McColl Jr., who is known for building his bank as well as the city.

“We talked about what can we do and what he's doing to make this city an even better city than it is today,” Stumpf told the Observer in an interview. “We both recognize this is a very special place. I think the long-term prospects are very, very bright.”

While Bank of America has expanded in New York with its Merrill deal, it also continues to build a new office tower and a Ritz-Carlton hotel in its hometown. Perhaps the biggest question for Charlotte about the bank is how deep of a commitment will its next leader have to the city. CEO Ken Lewis, who has faced stiff criticism from shareholders and lawmakers this year, is expected at 62 to stay on at most three more years but could depart sooner.

Although its mainstay banks have struggled, city leaders remain optimistic that a surplus of banking talent and office space will attract other institutions to town.

GMAC Financial Services is expanding a corporate center here, and smaller investment banks have opened offices. And, in perhaps an ironic sign of the times, a nonprofit that helps borrowers restructure troubled mortgages has plans to hire more than 1,000 workers.

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