Winston-Salem residents, businesses, and community leaders received a wake-up call when BB&T announced the world’s largest bank merger in more than a decade. The $28 billion deal will adversely impact the city because they are scrapping the company’s name and current headquarters to relocate to Charlotte, which boasts as the country’s second largest banking center only bested by New York City.
The combined bank will be the sixth-largest commercial bank in the U.S. by assets, pushing PNC Financial Services Group down a peg. The company will have 60,000 employees and around $440 billion in assets.
I long predicted that BB&T may one day seek to merge with SunTrust and the deal could result in Winston-Salem losing the crown jewel in its local economy. Furthermore, I’m now predicting this merger is simply the beginning to many more deals to come, because of the rollback of financial regulation there could be a wave of bank mergers in 2019.
Last year President Donald Trump upended many of the archaic rules and regulations put into place when the Dodd-Frank Act was enacted during the Obama Administration. Industry leaders and lobbyists successfully argued the increased oversight was stifling growth and making it overly burdensome for regional and community banks to operate efficiently.
Not to mention Trump’s overhauling the U.S. tax code have greatly benefited corporations and that has aided commercial lending institutions in building a war chest. Banks now have unmatched amounts of capital to deploy on acquiring other banks, new clients and technology.
Technology is not only roiling the retail and manufacturing industry, but it’s also driving hyper consolidation in banking. Advanced mobile banking applications mean the average customer rarely visits a branch any longer. New innovation and digital technology is automating many of the internal functions that once required human employees.
Let’s evaluate the impact to our local community;
- Jobs – undoubtedly BB&T will transfer a multitude of jobs to the new headquarters based in Charlotte. Not to mention its very common for companies to slash a number of positions that provide duplicate functions – BB&T is planning to cut more than 10 percent of combined expenses through eliminating branches and internal positions.
- Tax Base – the company owns property throughout the city and now has plans to vacate many of those buildings, which will impact the property tax base significantly. In addition, the company’s employees contribute to sales tax revenue when they shop local, so Winston-Salem is in real danger of losing revenue in a critical time when we are fighting to grow the tax base.
- Real Estate – as the company withdraws from the city and vacates property it will negatively impact the commercial real estate market causing the vacancy rate to raise and lease rates to fall. It’s also worth noting that current BB&T employees relocating to Charlotte will no longer need residences in Winston-Salem, further hurting the real estate market.
- Corporate Presence – the city is slowly losing the presence of large corporate headquarters; Reynolds, Wachovia, Krispy Kreme, and BB&T – all gone.
- Philanthropy – you only need a quick drive around the city to see the many fingerprints that BB&T have on the non-profit community. They partner and sponsor many organizations engaged in a wide range of initiatives – housing, poverty, education, financial literacy, arts and culture. Undoubtedly much of that capital will now fund activities in their new backyard.
Winston-Salem is a resilient community that has demonstrated an extraordinary ability to bounce back from tragic economic events. However our reactive approach to economic development is not working and ultimately harming the city’s future.
The people of this great city must wake up and start questioning city leaders on what exactly is the vision for the community. The people must challenge elected officials and economic developers to behave more proactively, pursue companies vigorously, and work overtime if necessary to rebuild the Twin City.
What kind of community do we actually want to be?
