Banking

Charlotte is set to gain another bank headquarters. Here’s what it means for the city.

BB&T and SunTrust fields and arenas that may change as a result of the merger

BB&T and SunTrust announced that they agreed to merge. As a result, will these fields and arenas be renamed?
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BB&T and SunTrust announced that they agreed to merge. As a result, will these fields and arenas be renamed?

The decision by BB&T and SunTrust Banks to combine into a new firm that will be based in Charlotte marks a reversal of the city’s trend of losing bank headquarters.

Thursday’s deal, if approved by regulators and shareholders, would make Charlotte the headquarters of the sixth-largest bank by assets and deposits, BB&T and SunTrust said. A name for the new bank has not been determined, they said.

For now, Bank of America is the only bank headquartered in Charlotte, though many other banks of all sizes have operations here. Bank of America is the second-largest U.S. bank by assets.

The deal would also help Charlotte compete with San Francisco for the title of second-largest U.S. banking center, a ranking determined by the value of loans and other assets held by banks headquartered in the two cities.

Charlotte has been in a close race with San Francisco for the distinction, as banking headquarters have disappeared from Charlotte because of industry consolidation like Thursday’s deal.

Nathan Stovall, a banking analyst at S&P Global Market Intelligence, said Thursday’s announcement shows that Charlotte remains a strong financial center.

“Neither one of these guys had a really large presence in Charlotte, and now they’re moving their entire c-suite here,” he said. “You’re bringing not only some wealth but a tremendous amount of influence.”

The move would make Charlotte home to two of the 10 biggest banks in the U.S. by assets. That would put it second to New York, headquarters to four of the 10 largest. Those four are JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley.

San Francisco has only one bank headquartered there among the top 10. That is Wells Fargo, which has its largest employment hub in Charlotte. In 2008, Wells agreed to acquire Charlotte-based Wachovia, a move that cost Charlotte another bank headquarters but gave it Wells’ largest employment hub.

BB&T is based in Winston-Salem. SunTrust is based in Atlanta.

In recent years, Charlotte has struggled to hang on to its coveted title of second-largest banking center, in part as its banks have been swallowed up by others headquartered elsewhere. City boosters often tout the ranking to promote the region in recruiting companies to relocate operations here.

In 2017, the Observer reported that Charlotte had lost its second-place bragging rights to San Francisco based on a similar analysis by S&P Global.

But an analysis by S&P in the fall of last year showed that Charlotte had recouped its crown. That came as Bank of America was increasing its assets while Wells Fargo’s asset growth remains limited by a Federal Reserve cap.

The Fed placed that cap on Wells Fargo last year following a 2016 scandal over unauthorized accounts and newer instances of customer harm. Wells Fargo told the Observer at the time that the decline in its assets was not entirely due to the asset cap. In one example, it pointed to disclosures that it had sold, or set aside to sell, $6.8 billion in certain mortgage loans over a 12-month period.

For the Charlotte area, the merger will also mean one less bank, reducing competition and choice in the market.

Forty banks operate in the region, according to the latest Federal Deposit Insurance Corporation data, down from 55 in 2007.

Today, more than 92 percent of the deposits in the Charlotte metro is concentrated in the hands of three banks: BB&T, Bank of America and Wells Fargo.

That percentage would likely grow once BB&T and SunTrust combine. SunTrust is the sixth-largest bank by deposits in the area.

According to the Charlotte Regional Business Alliance, the new bank would be the latest Fortune 500 company to be based in Charlotte. That list, which is currently made of seven companies, includes Honeywell, which last year announced plans to relocate to Charlotte from New Jersey.

Tariq Bokhari, executive director of the Carolina Fintech Hub and a Charlotte City Council member, called it a “huge deal” for Charlotte that the new bank plans to establish an innovation and technology center as part of its headquarters operation. The center will operate as a sort of lab where new digital banking products are developed, executives said Thursday.

Bokhari said the center would help Charlotte attract financial technology, or fintech, start-ups.

John Culbertson, a managing partner with commercial real estate consulting firm Cardinal Partners, said Thursday’s deal would also create business opportunities for companies that provide services to banks, such as accounting firms and fintech businesses.

“They’re going to feel very confident about expanding, taking more space, planting a flag here,” he said. “(It’s) a way of saying to developers out there, ‘You might not lease to BB&T, but there’s going to be a lot of other companies that this might have an impact on.”

BB&T and SunTrust executives said no decisions have been made on where they will put the headquarters in Charlotte. For his part, Culbertson noted that there isn’t enough space in buildings under construction in uptown, making it likely the new bank will have to build a headquarters building.

“(They’re) going to want to have their name on their building,” he said.

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Deon Roberts has covered Charlotte’s financial services industry for The Charlotte Observer since 2013. His beat includes Bank of America and Wells Fargo. He attended Loyola University in New Orleans and is a native of Lafitte, La.

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