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A Bullet Dodged 

Charlotte banks on

The bullet had been dodged, the Charlotte Observer reported in January 2006. Charlotteans could now officially stop worrying about Bank of America shifting its headquarters to New York.

At the time, the bank had just renewed its 10-year lease on 640,000 square feet in the Bank of America Plaza building uptown. It was one of the largest office leases signed in the country in 2005 and a testament to the commitment of the nation's largest bank to keep its headquarters in Charlotte, BofA execs told the Observer.

Then, three months later, the bank announced that it would be using an additional 522,000 square feet in its new 2 million square foot New York skyscraper near Times Square rather than leasing it out.

Though they'd never publicly cop to it, the New York skyscraper, first announced by the bank at the beginning of the decade, has given folks around here fits. So have rising Bank of America employment numbers in New York, which have steadily grown from 3,000 in 2003 to over 5,000 this year. Since the new 522,000 square feet represents an increase of 50 percent in the bank's office space in New York, one can only assume that they intend to grow their workforce there by something like half, which would put 7,500 bank employees in the Big Apple. By comparison, the bank now has about 13,000 employees in Mecklenburg County and 200,000 worldwide.

The bank has been clear that the New York growth is in global corporate and investment banking, which requires hob-nobbing with the world's wealthy in a way bankers can't quite do in Charlotte. Meanwhile, the Queen City is still home to the bank's top management.

Charlotte's status as the No. 2 banking center in the nation -- Wachovia, also headquartered here, is the nation's fourth-largest bank -- is more than just the alpha and omega of Charlotte's civic pride; it's part of the heartbeat of our economy.

Bank expansion is driving the condo boom uptown. The two big banks -- Wachovia is the other -- account for over 60 percent of the combined revenues of the nine Fortune 500 companies headquartered here. Of the top six employers here, two are banks and two are local governments (see chart at the end of this column). Charlotte is bank heavy, and that makes it vulnerable to a headquarters shift. Over the last decade, while the number of businesses moving here annually has fallen by half, bank investment and expansion has kept the local economy humming.

So far, Charlotte's streak of luck in the headquarters department has been unparalleled across the country as major city after major city lost bank headquarters to mergers and acquisitions.

The headquarters momentum slowed down in recent years, but appears to be back in full swing here. Wachovia and BofA are contributing millions to civic projects and building and gobbling up office space here again. When it was announced that a new $450 million, 32-story tower would rise next to the bank's planned Ritz-Carlton hotel, which will cater to bank travelers from out of town, BofA CEO Ken Lewis said that the new investments would make it harder for a future CEO to shift the bank's headquarters out of Charlotte.

But he didn't say it would make it impossible. So what is Charlotte's future as a bank headquarters? I recently posed this question to more than a dozen local and national experts.

All of them said essentially the same thing: with Bank of America now up against the federal "10 percent rule," which bars banks from controlling more than 10 percent of all deposits in the country, the bank would have a hard time legally merging with another large bank. This could put the survival of its Charlotte-committed management and headquarters location at jeopardy. Wachovia is still vulnerable to this, though everyone believed it unlikely that the bank's current leadership would allow its local commitment to Charlotte to be endangered.

Bottom line: Charlotte should be able to hold the headquarters for at least another decade, a conclusion that would have been questionable just five years ago.

In fact, from the Wharton school of business to Wall Street to the University of Tennessee, I couldn't find anyone who thought the two big banks' headquarters would be located anywhere but here come 2016.

Of course, Charlotte's banking sector is particularly vulnerable to the off-shoring of jobs because a lot of clerical and technology work is done here, so there is no telling how many bank employees will actually work in Charlotte a decade from now.

But the good news is that time is now on our side. If Charlotte wants to cement its place as a growing economic powerhouse, the time to diversify the economy by using the bank driven momentum to more aggressively recruit small and medium sized businesses is now. For the last two years in a row, the number of new businesses moving here has dropped by 20 percent. It's time to send those numbers in the other direction.

Charlotte's top six employers for 2005:

Wachovia Corporation -- 18,967

Carolinas HealthCare System -- 15,257

Charlotte-Mecklenburg Schools -- 15,134

Bank of America -- 13,000

City of Charlotte -- 5,838

U.S. Airways -- 5,749

Source: The Charlotte Chamber

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