For Wachovia's former hometown, it could've ended worse

Charlotte ObserverSeptember 27, 2009 

Looking back on last fall's financial crisis, former Wachovia general counsel Jane Sherburne said it's disappointing that executives scrambling to salvage the tottering Charlotte bank had to sell it to Wells Fargo to save it.

But, considering the fate of other failed firms, she's convinced the bank could have suffered worse: a government dismantling or a complex sale to Citigroup.

"It's been hard for individuals, but for the company and for shareholders and even employees we got a result that was vastly better than receivership and clearly much better than the agreement with Citi," said Sherburne, who started at the company in June 2008 shortly after the ouster of former chief executive Ken Thompson.

One year after Wachovia's dramatic fall, San Francisco-based Wells Fargo has cut more than 500 jobs here, former Wachovia shareholders are still reeling from their losses and uneasiness remains about the bank's plans. But there's also a growing feeling that Wachovia — and the Charlotte region — could have suffered an even worse fate.

As the crisis unfolded last year, Charlotte Regional Partnership chief executive Ronnie Bryant worried the city could lose 5,000 to 8,000 Wachovia jobs over time. Instead, a top Wells executive this month said the bank expects to grow from here. "We have fared better than I thought we would," Bryant said.

While the city has lost thousands of jobs since last year, business owners and economists say that things have begun to turn around. The city, long dependent on its two brash and conquering megabanks, won't emerge unchanged, but it will bounce back, they say.

"I think the financial services industry is ultimately going to come back to health, so I think Charlotte will be OK," Richmond Federal Reserve Bank president Jeffrey Lacker said after a recent speech in Charlotte.

To be sure, with Wachovia's takeover, Charlotte has lost a key corporate headquarters, and how the city will ultimately fare in the merger remains to be seen. The combined company faces a challenging conversion of East Coast bank branches and the ongoing fallout from the recession.

To some analysts, the announcement last week that Wells Chairman Dick Kovacevich is stepping down at year's end was a sign of his confidence in the merger and the company's prospects. In a research note this month, Rochdale Securities analyst Dick Bove said some investors remain skeptical of the bank's ability to absorb loan losses, cut costs in the merger and hold onto Wachovia's deposits.

"Management is convinced that it has produced a consistent high return on its businesses benefiting shareholders," Rochdale Securities Bove wrote. "Yet the tremors in the volcano keep rising; not subsiding."

Read more at CharlotteObserver.com

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