Charlotte worries about BofA's future
A crucial question is what his departure means for the bank's powerful presence in Charlotte.
By Kirsten Valle and Jen Aronoff
Posted: Thursday, Oct. 01, 2009
In a city already smarting from the nation's banking troubles, Ken Lewis' departure as Bank of America CEO adds another layer of uncertainty to Charlotte's economic future.
In interviews Wednesday with a dozen government officials, business leaders and banking experts, many wondered whether the bank's next leader would share Lewis' commitment to Charlotte. Some even worried the city might lose the headquarters, though bank officials have insisted that no such move has been considered.
Countless businesses and charities rely on Bank of America, and Charlotte owes much of its growth and prosperity to its banks. The company said earlier this year it employs about 15,000 people in Charlotte, though it has gone through widespread layoffs.
"I hope whoever succeeds him ... makes the same commitment to the Charlotte region that Ken has had for years," said Ronnie Bryant, CEO of the business recruiting organization Charlotte Regional Partnership. "There's always the thought in the back of your mind that something could change."
The news caps a rough year for Charlotte, a city long known for its thriving financial-services sector - but reeling more recently from a global banking crisis that eroded the city's wealth and threatened its identity.
Former Wachovia CEO Ken Thompson was ousted in June 2008. A year ago this week, Wachovia crumbled, eventually falling into the arms of Wells Fargo. Later, with its Merrill Lynch purchase gone awry, Bank of America's stock price plunged to historic lows.
Charlotte's banks have been key to the city's growth. Finance and insurance-sector wages make up 20 percent of Mecklenburg's private-sector payroll, paying out a whopping $5.2 billion last year.
As the financial crisis struck, though, the banks slashed bonuses and cut jobs. Shareholders' wealth plummeted, and the ripple effect spread to businesses across the region whose bottom lines depend on the banks' health.
Lewis' departure, city leaders and experts say, adds to the uncertainty.
"They've certainly got a worldwide focus, so for their top leaders, there's less time for Charlotte, and I think that's understandable," said Tim Belk, CEO of department store chain Belk and the current chairman of the Charlotte Chamber. "But there's tremendous depth of management, and a lot of those managers have played key roles in the city. So ... I hope that will continue."
UNC Charlotte finance professor Tony Plath said the news of Lewis' Dec. 31 departure wasn't surprising - or promising.
"Ken has just been beleaguered on all fronts," he said. "We all knew it was coming; we were just waiting for the timing."
The bank's board is already discussing a succession plan, and depending on its pick, the bank's headquarters could move to New York, Plath said.
That's because the company's revenue center is already moving that way, and the geographical center could follow, he said. The bank's board is largely centered in Boston and New York - where the company opened a midtown skyscraper this year - and a New York headquarters would be more accessible for the bank's growing European operations, he said.
The board wouldn't make such a move quickly - it needs a year or two to learn the bank and complete its merger with Merrill Lynch, Plath said.
In an interview with the Observer this spring, Lewis discounted the possibility of moving its headquarters.
"As I've said before, we're still a scrappy Southern bank that plans to be in Charlotte for a long time," Lewis said at the time.
Asked if that might change under a different CEO, Lewis said he didn't think the board of directors would ever agree to such a move. Besides, he added, "we have a huge infrastructure here that you would just not want to see go to waste. Plus, it's a great place to live."
Others in town Wednesday said they hoped that would continue to be the case.
"I have to believe that decisions like where to locate people or the headquarters are much bigger than who the CEO is," said Peter Conway, managing partner with Trinity Partners, the company that handles leasing for Bank of America Plaza.
He said Bank of America occupies 13 buildings in the area, and will add another when its new 32-story office tower uptown is complete next year.
"The facts are that the bank leases (or will lease) over 7 million square feet of office space in Charlotte," Conway said. "... You wouldn't want to change that. I remain rightfully optimistic about the bank's presence in our city."
News of Lewis' resignation spread late Wednesday, as the bank made final preparations at its luxury Ritz-Carlton hotel uptown, which opens today.
Mecklenburg County commissioners Chairman Jennifer Roberts said there's always a concern when leadership changes at a major employer.
Still, "I think any leader at that institution is going to realize the solid fundamental climate in Charlotte is good, and a good place to do business, and a place that workers want to live and move to," she said.
City leaders say Lewis shouldn't be defined by the rocky end of his tenure.
Republican mayoral candidate John Lassiter said Lewis has helped build Charlotte's cultural community, and that he shouldn't be held responsible for an economic meltdown that has touched "every financial institution in the world."
Lassiter's rival, Democratic candidate Anthony Foxx, said Bank of America under Lewis' leadership has done better than most in managing its affairs through the banking crisis.
Whatever happens with the bank's headquarters, its outgoing CEO has left an important legacy - albeit a different one than his predecessor, Hugh McColl Jr., some say.
"As Hugh McColl's successor, he wasn't publicly out front, but believe me, he was a huge force in things such as the NASCAR Hall of Fame, charities, the arts, affordable housing," Charlotte Mayor Pat McCrory said. "He's done it under the radar screen without much credit, but he deserves some credit now."
When Lewis pledged to do something, he kept his word and followed through, McCrory said. His departure, McCrory said, wasn't entirely surprising - it was always a matter of when.
"I'll miss working with him, but I hope he stays active in our community," he said, "because he's a talent we'd still like to take advantage of."
Staff writers Christopher D. Kirkpatrick, Christina Rexrode and Kerry Hall Singe contributed.
Kirsten Valle: 704-358-5248