Wachovia rumor chills Banktown

Of all the reports emerging from the nation's financial crisis, this is one Charlotteans really didn't want to hear.

Wachovia, one of the banks that helped lift the city to prominence as a national financial center, could lose its independence.

News organizations reported Friday that it's in preliminary discussions with Banco Santander SA of Spain, Wells Fargo & Co. and Citigroup Inc.

Wachovia isn't commenting.

The talks apparently are in the early stages and might not lead to a deal, but this is bound to cause even more hand-wringing in Banktown.

Mergers almost always are followed by employee cutbacks, and Wachovia already is laying off workers, primarily in its mortgage operations.

If you ask local business people, they are feeling the bank's pain now.

Several uptown residential towers have been cancelled or put on hold due in part, developers say, to skittish bankers reluctant to buy.

One condo developer told me this week that a Wachovia employee was coming in to sign closing papers on a unit when she got word she was being laid off. Instead of signing, she walked away.

Home sales are down, retail sales are down and the unemployment rate is up, contributing to general sense of malaise in a city on edge because of gas shortages and frustrating lines at the pump.

More uncertainty is the last thing Charlotteans need.

It's too early to know how a Wachovia merger would shake out, but if one of those giant banks is the suitor, Charlotte almost certainly would lose a headquarters.

Overlapping jobs would be eliminated for sure.

In the past, city leaders have debated what the loss of a bank headquarters would mean.

The city's prestige, of course, would suffer if it could no longer claim the headquarters of two of the nation's top six banks.

But real estate analysts say most of the other banking operations and the bulk of the jobs likely would remain here.

That's because rental rates and the overall cost of doing business would be substantially lower in Charlotte than, say, New York, San Francisco or Chicago.

On the downside, however, much of the office space in Wachovia's 48-story tower under way on South Tryon Street might not be needed after all.

Wachovia and Bank of America aren't the only game in town, but together they employ about 36,000 people.

Whatever affects those workers at the checkout counter, at the real estate closing table or in the charitable fund raising campaign ripples through the local economy.

Just a few days ago, Charlotteans were abuzz about Wachovia's potential merger with New York mortgage banking giant Morgan Stanley. Now that doesn't appear likely.

But what about these new prospects?

At this point it's too difficult to guess. Looks like this will be a long weekend – for Wachovia employees, Wachovia shareholders and the city.