With Lewis departure, what's Charlotte's role in
Thu October 1, 2009
With Lewis departure, what's Charlotte's role in Bank of America's future?
Now, the search begins to replace Bank of America CEO Ken Lewis. The prospect of a new CEO possibly without North Carolina ties leaves some wondering where Charlotte stands in the bank's future.
WFAE's Lisa Miller has more.
Ken Lewis has indeed had his trials this year. The New York Attorney General, the SEC, and Congress have all been after Lewis about what the bank did or did not tell shareholders about Merrill Lynch's mounting losses before the deal went through.
A shareholders meeting in April turned into a referendum on whether Lewis should stay. Many people stood up for him, but several shareholders groups like CtW Investment Group called for Lewis to step down. Shareholders stripped him of his chairman's role. Bill Patterson, the head of CtW says he's not surprised that Lewis is now stepping aside as CEO.
"Him stepping down is really the inevitable consequence of the large opposition vote that shareholders lodged against him and his board at the last shareholder meeting," says Patterson.
He has lots of thoughts about what Bank of America should do next, but he doesn't care if the bank's headquarters remain in Charlotte.
"For investors the question of location is secondary to the question of who's running the company and is the board going to defend their interests and act as an effective check on the new CEO," says Patterson.
But for some of Charlotte's leaders a shift in CEOs makes them worry whether a shift in headquarters is also to come. UNC Charlotte Finance Professor, Tony Plath, says as the bank has grown its shed many of its North Carolina connections.
"There are no board members left who have ties to the Carolinas and the number of managers in the company that are loyal to the Carolinas is beginning to shrink as well," says Plath.
"We knew the bank was going to evolve over time. It was inevitable that this would happen as they became a global corporation. But what this does is it forces us to that crossroads in history when they become more national and international sooner than what would have happened if Ken had stayed until his 65th birthday."
Bank of America has shot down speculation that it would uproot its headquarters. But President of the Charlotte Chamber Bob Morgan says he hears this concern a lot.
"We'd like to know how Charlotte would be affected, but it's going to take some time for the process to play out for us to really know what it means to Charlotte," says Morgan.
Mayor Pat McCrory can't see Bank of America without a huge presence in Charlotte.
"I don't think we'll ever be a Charlotte without Bank of America," says McCrory. "I think the question is maybe where will the next CEO live and in these days in times I think the whole scenario of headquarters is changing with every company as these companies become much more international. Of course we'll try to hope that the next CEO wants to make his or her home or presence right here in Charlotte."
In any case, Plath says even if a new CEO starts looking to relocate the bank's headquarters it won't happen any time soon.
"The board has many things to consider," explains Plath. "They've got to payback TARP. They've got to defend themselves in court against a variety of lawsuits. They've got to integrate Merrill Lynch with Bank of America and now they have to find a new CEO and identify a succession plan. All of those things have to be done first before you think about where you're going to locate the headquarters. For at least the next year or two there would be no reason or no motivation in the mind of the board to move the headquarters away from Charlotte.
Plath says Charlotte definitely has its perks. The bank has invested a lot in its infrastructure here and it's cheaper doing business in Charlotte. But New York has its pull too. For one thing, it would put the bank closer to Merrill Lynch's headquarters and regulators, plus it's easier to travel overseas from New York.
"There are a variety of logistical and practical reasons why they might choose to relocate their headquarters down the road, but at the end of the day that's not going to move the 15,000 employees who currently work for the bank in Charlotte out of the market," says Plath. "So we're talking about a relatively small number of people."
Plath estimates a headquarters change would likely result in only one hundred people leaving Charlotte. But the psychological impact on charlotte would be large.