First Union to Close Branchesgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
First Union to Close Branches
Friday, May 04, 2001
CHARLOTTE, N.C. — First Union Corp. and Wachovia Corp. plan to close 250 to 300 branches, or about 8 percent to 10 percent of their combined branches, when the two banks merge.
First Union chief financial officer Robert Kelly revealed the number of branch closings earlier this week during a presentation to analysts hosted by Morgan Stanley Dean Witter. Most branches that will close are within a half mile of another First Union or Wachovia branch, as the banks have said since announcing their merger last month.
First Union, the nation's sixth largest bank, is buying Wachovia for about $13 billion in stock in a deal that would create the nation's fourth biggest banking company.
First Union chief Ken Thompson and Wachovia chief L.M. ``Bud'' Baker have said they will cut 7,000 jobs in the merger, half through attrition. They won't say where or when those cuts will come.
Overlapping branches are one possible source: The average bank branch employs anywhere from eight to 15 people, though large branches may employ as many as 35. First Union spokeswoman Laurie Hedrick said employees of closed branches may get jobs elsewhere in the bank.
About 50 of the affected branches will be sold as part of the $1.5 billion to $2 billion in deposits the new bank expects it must sell to meet antitrust requirements that dictate one bank can't control too many deposits in a community. No branches will close until the end of 2002.
Kelly also said the banks will close a data center fairly quickly. Banks use such centers to store customer account information on mainframe computers.
``That's very expensive to run and that will be a big savings and people are on this issue aggressively already,'' he said.
Neither First Union nor Wachovia will say which data center will close or how many people it employs. The highly secure locations typically house expensive technology but don't employ many people.
The banks expect to save $890 million a year by merging, nearly half of that from lower personnel costs. About half the savings will come in the first 17 months after the deal is final, Kelly said. The merger is expected to close in the year's third quarter.
Shares of First Union were up 11 cents to $29.85, while shares of Wachovia were up 42 cents to $60.77 in Friday trading on the New York Stock Exchange.
-- Martin Thompson (firstname.lastname@example.org), May 04, 2001