Winston-Salem-based bank BB&T has announced it will merge with SunTrust Banks to create one of the largest banks in the country.
If approved by regulators, the deal would result in a new firm worth about $66 billion, and a new headquarters located in Charlotte.
Winston-Salem Mayor Allen Joines says he only found out about the deal early Thursday morning, and while disappointed, he realizes the company needed to move forward.
“Today's news is not the best news that we wanted to hear this morning as we were waking up,” Joines said. “But in saying that, we do understand BB&T's need to make these moves.”
He also pointed to assurances made by BB&T that they would be keeping many employees in Winston-Salem, even as much of the corporate team will be relocating to the new Charlotte headquarters.
The combined corporation will keep what it calls a “community banking center” in Winston-Salem, and a “wholesale banking center” in Atlanta, where SunTrust is based.
“Every BB&T employee who was a retail-facing or client-facing job will have a job,” he added. “We don't know the back office side of that at this point. So there's still a lot of questions to be answered.”
Joines also mentioned that BB&T has committed to increasing its investment in the community, and he's optimistic for the long-term growth of the local economy.
But major mergers often create overlap where the two companies once competed. There may currently be a SunTrust branch next to a BB&T branch, which doesn't necessarily make good business sense. And according to Wake Forest University finance professor Ajay Patel, that's where cost-cutting – and workforce reduction – often come into play.
“They've talked about reducing $1.6 billion in costs. Some of that's going to come from closing branches. You close branches, and you're going to eliminate certain positions,” he says. “Now which branches will get closed, I really don't know."
Patel points out that the best point of modern comparison for Winston-Salem is when the city lost the Wachovia Bank headquarters in a merger with First Union. In the wake of that deal, the headquarters ended up moving to Charlotte.
And while Joines painted an optimistic picture for local workers and the city's economy Thursday morning, Patel thinks it's too early to really know the magnitude of the economic impact the BB&T news will have. But he does think it will make a dent.
“I don't believe we know how hard it will hit it,” he says. “We do know Winston-Salem and the area will take a hit."