Anxiety struck deep 10 years ago in the City of Lakes, when a big hometown bank pulled off a major deal that moved its headquarters to San Francisco.
Workers feared losing jobs as Norwest bought Wells Fargo, and took the better known name. The community worried about losing charitable dollars.
Not long after, the bank signaled its commitment by buying and renovating the headquarters of Honeywell, another homegrown giant that moved on. Today, more than 3,600 people work on the parklike campus. They are part of Wells' huge Twin Cities work force, which accounts for most of the bank's 20,000 Minnesota workers. Employment is up nearly 50 percent since the deal. So is giving to nonprofits. To some, it's almost like the old Norwest never left.
Now, as Wells engineers another blockbuster deal with its purchase of Wachovia, Charlotte is looking to Minneapolis for clues to its fate.
The city faces threats to its 20,000 Wachovia jobs, the bank's generous civic giving and its prestige as home to two financial giants.
Wells chief executive John Stumpf has made no promises on jobs or giving, but he's brought up the bank's growth in Minneapolis more than once when talking about Charlotte. Bank and civic leaders in Minneapolis say Charlotte should take comfort in their city's experience.
“It worked beautifully 10 years ago,” said Jim Campbell, a Norwest veteran who became chief executive of Wells' Minnesota operations. “There's no reason it won't work this time.”
But there are key differences. Norwest's Minneapolis bankers were in charge in the Wells deal, and they took care of their home turf. Stumpf, then a regional president, and Campbell are natives of Minnesota.
The Wachovia deal also comes amid a deepening national economic slump. And banks face unprecedented challenges. This year has seen the collapse of storied financial institutions, historic government intervention, swelling loan losses and sinking profits. Even in good times, mergers result in job loss. The current shaky environment makes workers even more vulnerable.
Campbell's younger brother Jon brings a veteran's perspective to Charlotte's concerns. He's been with the bank since 1977 and is Wells' current Minnesota chief. He's not directly involved in the Wachovia deal but heads mergers for regional banking. At the time of the 1998 merger, he led the Phoenix market, which had heavy overlap between Norwest and Wells. The bank's Arizona employment has since doubled.
“Don't think Charlotte won't be a favored child,” he said last week during an interview at the striking art deco Wells Fargo Center in Minneapolis. “It's part of my job to make sure the Twin Cities feels as important to Wells Fargo as it did 10 years ago. That was my job in Phoenix. It will be somebody's job in Charlotte.”
Minneapolis drew its early wealth from the Mississippi, transporting lumber from rich forests and powering mills that ground abundant grain harvests into flour.
Banks grew to serve that early industrial base. A member of the Pillsbury family, which built the national baked goods brand, was among the founders of Northwestern National Bank in 1872. The bank, which later changed its name to Norwest, was high profile in Minneapolis and not just because it was big.
In 1949, the downtown headquarters sprouted a tower topped with a “weather ball,” visible in many neighborhoods. The ball changed colors to signal the coming weather. That's a big deal where frigid winters means lakes freeze deeply enough to drive on. Parents readying children for school looked out to see the glowing ball.
As the bank grew in the Midwest, executives espoused precepts they adhere to today: You can't have a successful bank in a failing community. Local bank leaders are best suited to make decisions about local markets.
“We had always portrayed ourselves as close to being a hometown bank as we could possibly be,” said Jim Campbell, whose father was head of a small-town Minnesota bank.
Early in discussions about the Wells deal, Campbell recalls then-chief executive and chairman Dick Kovacevich asking him to remain in Minneapolis, to be the local face of the merged bank. Kovacevich and other top leaders moved to the new headquarters.
Word of the merger sparked worries among employees, charitable groups, city leaders and customers. Local Fortune 500 executives asked Campbell if the bank would be there to serve them.
“Within the first few days, it became my responsibility to send signals to the community as to what life would be like after we became Wells Fargo,” said Campbell, who retired in 2002.
Early on, the bank announced a hiring freeze and said it hoped attrition would take care of needed job cuts, Campbell said. He didn't promise everyone would keep their current job but said the bank would try to find other jobs for people who lost positions. Last week in Charlotte, crowds of Wachovia employees heard the same “retain and retrain” message when Stumpf addressed them.
The signals of commitment Campbell sent included serving as chairman of the United Way campaign the year of the 1998 merger. Early in 1999, the bank donated its impressive art collection to the Minneapolis Institute of Arts.
Later that year, Minneapolis suffered another blow. Honeywell, a global diversified manufacturer with deep Minneapolis roots, kept its name after a merger with AlliedSignal but chose New Jersey for its headquarters. Almost immediately, Campbell looked at buying the corporate campus in a troubled inner city neighborhood. He had been among civic leaders trying to revitalize the struggling Phillips community.
Wells Fargo spent about $175million buying the site, cleaning up contamination, renovating two buildings and adding one. Wells mortgage operations, which had been scattered around the city, consolidated at the center.
The move was significant for the community because a sprawling vacant site would have added to the blight, said Mihailo Temali, executive director of the Neighborhood Development Center, a nonprofit that works with entrepreneurs and small businesses in poor Twin Cities neighborhoods.
Initially, the loss of Norwest headquarters was a concern for Temali and others, but he said the bank's giving continued and employees remained deeply involved.
“We work with a number of banks, but Wells Fargo has always been one of the best,” Temali said.
Wells Fargo expects its charitable giving in Minnesota this year will top $10 million, up from $7 million 10 years ago.
“From the very beginning, we were all promised that nothing would change,” said Lauren Segal, president of the Greater Twin Cities United Way. “We waited to be proven wrong, and we never saw that happen.”
That has also been the case from the broader business and city perspective, said Todd Klingel, chief executive of the Minneapolis Regional Chamber of Commerce.
“The leaders of Norwest Bank, Jim Campbell particularly, assured us that we would not suffer because of losing the headquarters,” he said. “He was absolutely correct.”
At the time of the Wells deal, the younger Campbell brother was in Phoenix as president of Norwest in Arizona.
That deal also took the bank into new territory, but the overlap in the Phoenix area made workers especially vulnerable to job cuts. Customers were upset, too.
Jon Campbell spent weeks in the hot seat, sharing what little he knew that early in the process. He asked Kovacevich to meet with employees and customers in sessions similar to those in Charlotte last week.
“We won the trenches game because we were out there talking to people,” he said.
Soon after the merger, Campbell bought a Phoenix customer's dairy farm for a big operations center. At the time of the deal, Wells had 4,800 workers in Arizona, while Norwest had 2,500. Today, the bank has 14,000, nearly double.
“You commit resources where you already have people,” Campbell said. Of good employees, he added, “to not find a way to keep them around is a huge mistake.”
Last week in Charlotte, Stumpf brought up the Minneapolis growth story while introducing himself and Wells to hundreds of Wachovia employees jamming the bank's sunlit uptown Atrium.
“I can't promise the same thing in Charlotte, but I will say our communities are clearly important to us, and Charlotte will remain our eastern headquarters,” he said. “That's critically important to us. Businesses will be headquartered here.”
About half of Wachovia's 20,000 Charlotte employees work uptown. The other half work at a 2-million-square-foot center in the University area. The site includes customer service, a call center, technology and other operations.
Wells has multiple operations centers now, including those in Phoenix and a futuristic-looking site that opened in 2003 north of downtown Minneapolis. Business lines are based in several cities, such as the mortgage headquarters in Des Moines, Iowa.
The Wachovia deal extends Wells' banking reach to the heavily populated East Coast and into the South.
“There's no significant operation center east of the Mississippi for the existing Wells,” Jim Campbell said. “Somebody is going to have to do something somewhere.”
Wells has said it expects to trim 10 percent of annual spending from the combined banks, a $5 billion cut.
Experts have estimated Charlotte could lose 1,500 to 2,500 jobs. Workers likely at risk include those in areas such as marketing, human resources and finance, where both banks have positions. Technology jobs could be at risk if Wells sticks with its systems. Analysts also question whether Wells will keep businesses such as corporate and investment banking, which provide well-paid jobs in Charlotte.
Cost-cutting isn't the bank's main approach to making a merger work, Jon Campbell said. The top goal is increasing revenue by selling each customer multiple products, from checking accounts to mortgages, insurance to credit cards. That, he said, means the bank has growth prospects despite the downturn. Wells officials are eager for an inside look at how Wachovia leads the industry in customer service.
Klingel, at the Minneapolis Chamber, and others say Wells is such a big player in town that some people probably think it is still based there.
“That's the highest compliment someone can pay us,” Stumpf said in an interview last week. “I think a healthy Wachovia – now Wells – and a healthy community are good for Charlotte.”